As rents plunge, advisory firms snap up bigger, better digs

Driving hard bargains with landlords; ‘holding the cards for the first time'

Aug 12, 2010 @ 3:54 pm

By Lisa Shidler

For the first time in years, Judith Bedell and Mike Frazier got to call the shots when they negotiated a new lease for their advisory business in Walnut Creek, Calif.

They convinced their landlord to lease them the prime spot on the top floor of Walnut Creek Center, which features panoramic views of California's Mount Diablo.

The cost for the five-year lease on the 2,700-square-foot space? $5,500 a month. That's 40% less than what the firm had been paying for a smaller office in the same building.

“Commercial real estate has been hammered and there's a lot of space available,” said Mr. Frazier, a partner of Bedell Investment Counseling, which manages $300 million in assets. “We knew we were finally holding the cards for the first time.”

(Prices have dropped substantially in virtually all major markets, but these places remain, by far, the most costly to expand a practice.)

Ms. Bedell and Mr. Frazier aren't alone. Industry watchers say other advisers are capitalizing on the weak commercial-real-estate market, picking off bargains in the process.

“I can't believe the number of advisers that are taking on bigger space,” said George Tamer, director of strategic relationships at TD Ameritrade Inc.

Mr. Tamer said he's spoken with a dozen advisers across the U.S. who have recently snagged larger offices at less-expensive rates.

“Advisers have seen their businesses stabilize and they've seen their revenues come back,” he said. “They have a better handle on their expenses and now they can take advantage of these deals.”

Mr. Frazier said his firm decided to renegotiate its lease seven months early — and didn't face any objections from the landlord.

The firm also talked the landlord into paying for a number of improvements to the space, including removal of some walls, additional cable wires, and a redesign of the kitchen.

Another adviser, Rick Miller of Sensible Financial Planning and Management LLC, said his firm landed a 2,500-square-foot space in the historic Watch Factory in Waltham, Mass., this spring — at a savings of 30% to 40%.

The new space is a substantial upgrade for the firm. Before, the practice was housed in a tiny (500-square-foot) executive suite in Cambridge, Mass., with a shared kitchen and a meeting room that they were required to pay to use.

Now, Sensible Financial, which manages $200 million in assets, has its own conference room and kitchen. The office also looks out onto a courtyard and features several skylights.

The new space saves clients money, as well. In the old place, clients had to pay for parking.

“Clients love it because of the free parking,” Mr. Miller said. “We're all very happy here.”

Shop Talk is a regular column detailing how financial advisers run their businesses. The column focuses on unusual or innovative ways to attract more clients. Suggestions or tips for Shop Talk? E-mail Lisa Shidler at or visit the Shop Talk page at InvestmentNews/shoptalk.


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