HSL 1526 West Main

Proposal

Introduction

Zachary,

As we discussed when viewing the property on Friday morning, here is our proposal for leasing 1526 West Main. In this proposal I am focusing on establishing a long-term home for our organization that will support our current growth and become our flagship location for our next goal to expand to multiple locations around the Phoenix valley. This building is right in the sweet spot of size and location for our organization, and we look forward to building a positive relationship as we act as the custodians of the property.

Sincerely,

[signature]

Judd Uhre

About HeatSync Labs

HeatSync Labs is a 501c3 educational organization that focuses on teaching people to use tools and technology. We have been serving the community since 2009 and have been located in downtown Mesa since 2011. We are community driven with our volunteer members filling the board positions, teaching classes, and hosting lab hours for our members to come and use our equipment.

Our revenue comes from member fees and from hosting dozens of classes and meet-ups each month. COVID was a big challenge for us, as it was for so many smaller enterprises. We have been recovering rapidly and are now outgrowing the space that seemed too big for us when we moved in, in 2019. We are excited to continue our growth into a larger space!

Why 1526 West Main

While being located in downtown Mesa has its benefits, it is not an ideal fit for our mission. Retail shops - with large amounts of foot traffic and customer turn-over measured in minutes - are better suited to the store-front shops we have occupied for the past 11 years. 1526 West Main will serve us better with dedicated parking for our members who come to us as a destination rather than by walking by.

The larger space will also accommodate our current equipment more comfortably, providing a better educational experience for our classes and meet-ups. To achieve our next level revenue goals, which will set us up to open a second lab and beyond, we will need the breathing room available at a place like 1526.

The Proposal

HeatSync Labs proposes to begin occupying 1526 later this year, beginning a build-out to suit our needs. We want to make necessary repairs to the existing systems and to make upgrades which will increase the value of the property for the long run. We also have a number of less ambitious upgrades that will make the property suitable for our needs.

For the basic repairs and build-to-suit, we propose to begin with a build-out and move-in phase before we begin paying rent. For the more significant property improvements, like pavement, sign renovation, and fire suppression, we propose paying for the improvements up front in exchange for reduced rent over five years.

Plan of Action

Phase 1: Validation

During the first phase of the proposal, HeatSync Labs will begin due diligence to document the building suitability, repairs, and upgrade requirements. This will include the following:

1. Zoning: We will ensure that our activities will fit within General Commercial zoning.
2. Building Code: We will seek verification that our activities fit within the building code, or find what changes must be made.
3. Inspection: We will have the building and systems inspected and a report written on any deficiencies.
4. City of Mesa: We will talk with City of Mesa, both to verify our findings regarding zoning and building code, and to see if they have existing programs to assist with our move.
5. Fire Marshall: We will verify our findings regarding building code and inspection with the fire marshal.
6. Other?...

Phase 2: Intent to Proceed

At completion of validation we will present our findings along with specific costs, proposed lease reduction, and a timeline with milestones. When we reach an agreement with the lessor, we will sign an intent to proceed and begin our build-out.

1. Intent to Proceed: We will [do some thing that commercial real estate proposals do when they cross the Rubicon - sign a document of intent to proceed? Put some money in escrow? Wait for the lessor to put some money in escrow?]
2. Begin Build-Out: HeatSync Labs will begin the build out.
3. Status Update: HeatSync Labs will update on status [period]-ly and on milestones as they are reached.
4. Build Out Complete: Upon completion of the build-out, HeatSync Labs will provide a final status report.

Phase 3: Move-In

With repairs and build-out complete, HeatSync Labs will begin moving in.

Phase 4: Lease Payments Begin

After [X months] of lease abatement, HeatSync Labs will begin paying the lease at the reduced rate negotiated in consideration of the more major upgrades.

Lease Rate Table

Period	Headline Rate	Abatement	Net Rate	Notes
Build-Out (3 months)	$3100	$3100	$0
Move-In (6 months)	$3100	$3100	$0
Year One (12 months)	$3100	$800	$2300
Year Two (12 months)	$3255 (5% increase)	$800	$2455	Lessee may terminate lease without penalty.
Year Three (12 months)	$3418 (5% increase)	$800	$2618	Lessee may terminate lease without penalty.
Year Four (12 months)	$3589 (5% increase)	$800	$2789	Lessee may terminate lease without penalty.