Posts Tagged ‘business’
Wednesday, August 18th, 2010
Your primary business is running your company. How often do you lease office space? Hopefully, you don’t have to do so more than every 3 to 5 years or so; the same with lease renewals.
The bottom line is that you rent office space only a few times in your business life. Landlords on the other hand rent space over and over again. In most cases, they even hire a listing agent to help market the property and advise them. Do they have an unfair advantage? You bet they do. How do you balance this unfair advantage? Engage the services of your own qualified tenant representative.
Many tenants have a fear that by engaging the services of a tenant representative they will end up having to pay more in rent so that the landlord can pay the tenant representative. I am sure you have heard the sales pitch from an agent that engaging a tenant representative doesn’t cost you anything. The response I hear to this is “the landlord tacks on the fee on top of the lease rate.” So, who is right?
When it comes to negotiating for office space, there is no question that a good tenant rep will not only save you money, but will also make sure you don’t make any critical mistakes.
Not to mention, there is usually already a real estate fee built into the asking price. This is paid whether or not you have representation. Typically, what happens is that the fee, usually 4% to 6% of the gross lease amount, is split between the tenant representative (leasing agent) and the listing agent. There really is no additional fee tacked onto the lease rate and you won’t save anything by not having representation. The listing agent, who represents the Landlord – no matter what they tell you – will get the whole thing.
What about lease renewals? Should you also engage the services of a tenant rep? Absolutely! How a tenant representative gets paid on a renewal is negotiable. Should they be paid a full fee on a renewal negotiation? The answer depends on how much work is involved. If is just a matter of going out and doing a market survey then negotiating the deal, they probably don’t deserved a full fee. Most tenant reps will work as consultants either hourly or for a predetermined flat fee. On the other hand, if you want to consider other alternative locations, request proposals and do some preliminary negotiations on other properties, it is justified. It is a comparable amount of work that would have to be completed if you were moving. Or at least a half of a fee is justified, the leasing side of a commission.
How will a tenant rep save you money?
1. The leasing process is generally complex. After labor costs, your investment in office space may be your most expensive line item and decisions you make will have an impact on your company’s profitability. The tenant representative is your guide through the process.
2. Market knowledge is a key ingredient in which a qualified tenant representative can make a big difference. Having a grasp on asking rates versus deal rates and incentives available is important to make sure you get the best terms available.
3. A qualified tenant representative understands the numbers and is able translate data into implications for your business – advice on growth strategy within a particular building or market, for example. Tenant representatives are also able to perform financial analysis to help you select the most cost effective location.
4. Expert negotiation skills are critical for a favorable outcome. Representation gives you subtle leverage during negotiations, informing the landlord that you are professionally represented and undoubtedly advised of alternative sites and comparable lease rates. As an added benefit, a tenant representative may know the temperament of a particular landlord and/or landlord’s representative, and recognize how far to push the negotiations without jeopardizing the transaction. This is a definite advantage when it comes to lease renewals, too.
5. Familiarity with the documents is a must. Tenant representative have a working knowledge of the documents necessary to conduct the transaction. These documents include requests for proposal, letters of intent, lease agreements and workletters and vary from market to market. A tenant representative knows how to customize the documents to meet your needs.
Source: James Osgood – OfficeFinder
Tags: analysis, building, business, cost, estate, financial, growth, help, landlord, lease, listing, market, money, office, office space, process, professional, property, rate, Real, Real Estate, rent, sale, save, services, space, survey, Tenant, time, transaction
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Sunday, August 1st, 2010
Corporate real estate is too often taken for granted.
As the CEO, you are focused on your customers and their needs, and you probably don’t spend a lot of time thinking about real estate until either your lease is up for renewal or the roof starts to leak.
But real estate should be an important part of your business strategy.
There are a lot of factors in real estate that affect your company, both directly and indirectly. The one that is top of mind for most executives is cost.
Some companies opt to fix their costs as much as possible by buying space. For example, Target and Wal-Mart own the vast majority of their stores, and the value of the real estate they own helps the overall valuation of the corporations.
Other companies choose to lease so that their focus remains on their core competencies and the real estate management is left to others.
The route you take depends on your business plan. If you have capital, it’s a great time to buy your own space. On the other hand, it’s also a great time to secure a great space at lease prices that haven’t been seen in many years.
When you are analyzing your real estate needs, don’t stop at just costs.
If you are in a poor location, you may have increased costs because of vandalism or theft, and you will also have a harder time attracting top talent. If the location is difficult to get to, a long commute can encourage people to look for jobs that are closer to home.
Also, think about how your space reflects on the image you are trying to portray of your company. If someone claims to be a high-tech leader and you visit their office and find tattered furnishings and an outdated space that looks 20 years old, does that really say “high tech” to you or any other customer?
Consider how other companies use their spaces to reinforce their brand image. Go into the offices of a large law firm and you are likely to find a luxurious look that says, “We are high-class and have been around forever.”
It’s all about using your real estate to maximum effect. Look around your office and ask yourself what message your space sends to your visiting customers.
And it doesn’t stop with just the look of your space. How is the layout configured? Could you have people sharing space so you can reduce the amount of space you need (and the costs that go with it)? Is the space set up to maximize workflow? Or are you encouraging people to cooperate and act in teams in a space that limits personal contact and hinders communication?
Even if you are looking at just the bottom line, how much you pay in rent every month might be reduced if you take the time to have a professional analyze your situation and renegotiate with your landlord. You might have to add a few years to your lease, but in return, you’ll get a reduced rate and thus an improved cash flow.
Always try to get an exit clause in your lease if you can. You never know which way the market will go next and having an out can save you a lot a grief. And while it’s true that the market is battered and it’s a buyer’s market, don’t lose sight of your integrity. Even though you may have the advantage, treat your landlord with respect and negotiate a fair deal, because, as the old saying goes, what comes around goes around.
This buyer’s market won’t last forever, so now is a great time to figure out whether you real estate strategy is still meshing with your overall goals.
Source: www.sbonline.com
Tags: business, buy, contact, corporate, cost, estate, executive, help, home, jobs, landlord, lease, manage, market, negotiate, office, prices, professional, rate, Real, Real Estate, rent, save, time, valuation, value
Posted in Corporate Real Estate Strategies | No Comments »
Friday, July 30th, 2010
As a commercial real estate broker, I’m often approached by landlords requesting that my clients pay larger security deposits or sign a personal guarantee in the event that they default as tenants. However, it’s no longer the tenant that can end up in default or in breach of their lease. Now it’s the landlord too!
The current weak economic climate and the number of landlords struggling to stay afloat amongst all their distressed assets presents a new set of challenges for commercial tenants. Landlord default is now a hugely important consideration for companies leasing or renegotiating their leases as it represents a major area of business risk generally not contemplated until recently.
With the leasing market in the doldrums and real estate prices still falling, many building owners are defaulting on their loans, have no cash at hand to manage their properties, perform tenant improvements and other financial obligations per their leases and even afford the fixed costs of leasing space to a new tenant.
So how do you, the tenant, determine which landlords to lease from and which to avoid and what extra steps does your real estate broker need to address in the lease to protect you from landlord default and the potential ensuing consequences?
Here are four important rules to follow:
1. Know the landlord
Before signing a lease, be sure your real estate broker has thoroughly researched the property and its owner. Ask to review the landlord’s current and historic financial statements if possible and ask your broker to request a property title report to confirm they are not in default on their loan payments. This will help you determine the landlord’s long-term financial stability and ability to service their debt. Also, ask your real estate broker about the building owner’s reputation. Just as the landlord will scrutinize your financials and operations as a prospective tenant, now it’s time to do the same to the landlord to ensure that when you do sign a lease you can do so knowing that it’s likely your lease rights will be upheld by the landlord.
2. Negotiate self-help or rights of recourse
In the current economy, a landlord in financial distress may reduce building services, maintenance or capital improvements to the property in order to save money. As a tenant, ensure the landlord is obligated in the lease to provide a very specific level of service. You also need to ensure that, if building services fall below the required standards, you have methods of recourse such as the right to off-set rent payments, terminate your lease, or hire someone to perform the work required at the landlord’s expense. Such rights can be difficult to negotiate for the smaller tenant however but they are important to ensure that your business can continue to operate properly in the event that your working environment is compromised.
3. Protect yourself against foreclosure
If you’re leasing space and the building enters foreclosure, you want your lease to remain valid and your rights as a tenant to be protected. As part of your landlord due diligence, obtaining and analyzing a title report to determine what, if any, loans exist on the property, is the responsibility of your real estate broker.
If there are loans in place, make sure your real estate attorney obtains a favorable subordination, non-disturbance and attornment agreement. This will offer you the protection you need in the event of foreclosure, particularly if you are investing significant money towards tenant improvements.
4. Protect tenant improvement allowances and other concessions
Landlords typically agree to pay for all or part of the tenant improvements by way of a tenant improvement allowance. Either the landlord undertakes the improvements themselves or the tenant is reimbursed by the landlord when the project is completed. If a landlord files for bankruptcy, you could potentially lose any outstanding tenant improvement reimbursement. To protect yourself, negotiate the lease or work letter to either place any tenant improvement allowance in a third-party escrow account, secure the allowance with a letter of credit or grant the tenant the right to off-set the unpaid allowance against future rent payments.
For more information on this subject, call Stefan Rogers at 949.263.5362.
Tags: building, business, commercial, cost, economy, financial, landlord, lease, manage, money, negotiate, owner, prices, property, rate, Real, Real Estate, reduce, Report, research, save, services, space, Tenant
Posted in Corporate Real Estate Strategies | 1 Comment »
Tuesday, July 27th, 2010
Locally based Voit Real Estate Services’ CEO Robert Voit exclusively tells GlobeSt.com that the company is augmenting its leadership structure to better serve its clients “during these challenging, but opportunistic times.”
Voit points out that “the early success the company has achieved with its asset services wins on the two 12-asset distressed portfolios,” which GlobeSt.com exclusively reported on at the time, “has given Voit a bit of momentum in the distressed arena,” he says. The first of the two was “given to us by a national bank in the greater Sacramento area; and the second given by the Lehman subsidiary LAMCO LLC, which spans five western states; has given Voit a bit of momentum in the distressed arena,” he adds.
And although brokerage volume at the company is up 30% over last year, Voit points out that although those are encouraging numbers, “we’re just getting started.” In order to “enhance that growth momentum,” Voit is reorganizing its leadership team. Robert Voit and his partner, Brian Malliet, are turning over the day-to-day operations to Jeff Doan, and a new member of the team, Bob Freund.
Freund joins Voit as its COO, leading asset services and brokerage services. Freund served with Colliers MacCaulay Nicolls for more than eight years, most recently as vice president of business integration for North America where he led acquisition integration and initiated strategic alliances and partnerships. Prior to that, he was with Ernst & Young.
Jeff Doan, who joined Voit in 2009 as director of operations has been promoted to chief administration officer and CFO. In this role, he will handle the day-to-day operations of the property management, accounting and administrative side of Voit’s business operations.
“With this change, we believe we can offer accelerated decision-making and expanded support for our people and their clients,” Voit says.
As a part of this leadership strengthening, Malliet who in addition to being Mr. Voit’s partner had previously served in the COO position, will be elevated to the role of chief investment officer. In this role, he will focus on strategic relationships with special servers and receivers, brokerage teams and client business development where his skills are most needed, according to Voit. Both Voit and Malliet will continue to work on “strategic alliances, key new broker hiring, and addressing revenue-generation opportunities and acquisitions.” Voit adds: “As we push for more efficiency and faster execution, we are also determined to succeed and grow.”
Source: www.globest.com
Tags: brokerage, business, growth, manage, office, property, rate, Real, Real Estate, Report, services, strategic, time, voit
Posted in Real Estate News | 1 Comment »
Monday, July 26th, 2010
Orange County office and Industrial commercial real estate continues to stabilize
Voit Real Estate Services is has just released it’s latest 2nd quarter 2010 Orange County commercial real estate market reports for the office and industrial real estate sector. Voit’s 2010 Commercial Real Estate Market forecasts and a complete list of reports for Office, Industrial, Flex, R&D and Retail commercial real estate for Orange County, San Diego County, Riverside County, Los Angeles County and Las Vegas are now available at www.voitcts.com. Click HERE to view the reports.
Highlights for the Orange County Office Market are:
Vacancy – Up
Net Absorption – Down
Lease Rates – Down
Transactions – Flat
Construction – Down
While the above trend is similar to that witnessed in the 1st quarter 2010, we are experiencing a significant increase in transaction activity, a large percentage of which is likely a result of pent up demand from short-term lease renewals and also that new lease packages now offered by landlords are becoming very appealing to businesses. We are also witnessing a definite steadying in the decline in office rents, which have already stabilized in some sought after locations/building types. The vacancy rate and availability is also stabilizing.
All of the above indicates a clear turning point in the Orange County office market. However, while these are positive signs, there are no expectations of any thing but a slow and steady recovery through the rest of 2010 and into 2011.
Current market conditions continue to offer surprisingly cost-effective solutions for businesses to lease or buy office space in order to reduce overhead for the long-term and realign their real estate with their business plan.
Click HERE for a comprehensive forecast for the 2010 Orange County Office Market.
For more information or impartial advice on what Voit’s market data means for your business and how to take full advantage of the “Tenant’s Market” to reduce overhead and realign your real estate with your business plan, contact Stefan Rogers at 949.263.5362.
Tags: available, business, commercial, cost, forecast, landlord, lease, office space, orange county, orange county office, Real Estate, real estate market, recovery, reduce, rogers, San Diego, Tenant, vacancy, voit
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Monday, July 26th, 2010
A dramatic change in commercial real estate lease accounting will be released shortly, which is expected to have far reaching consequences for businesses.
Last month the U.S. Financial Accounting Standards Board (FASB), and the International Accounting Standards Board (IASB), issued an Exposure Draft of future lease accounting changes. The proposals represent significant changes and accounting for all leases of real estate and equipment, existing and new.
All business owners, CFO’s and corporate real estate decision makers should ensure they fully understand these changes and how they will impact their companies as the reality of new lease accounting rules approaches. Many will be faced with the daunting challenge of preparing their existing lease portfolio and reassessing the criteria for structuring effective leases in response to the changes.
For more information contact Stefan Rogers at srogers@voitco.com / 949.263.5362 or look out for our comprehensive post on the subject matter in a few days.
Tags: business, commercial, corporate, financial, lease, owner, Real, Real Estate, rogers, voit
Posted in Corporate Real Estate Strategies | No Comments »
Thursday, July 22nd, 2010
Developer Mike Harrah has won changes in city rules that could allow his long-stalled One Broadway Plaza office tower to start construction in Santa Ana.
The City Council on Monday waived a rule requiring Harrah to lease half of the proposed 530,000-square-foot tower before starting construction.
Those “rules were set six or seven years ago,” Harrah told the Business Journal in June. “It’s a different world now” in the office market.
Harrah won voter approval for the project in 2005 with a measure that included the 50% preleasing rule from the city.
One Broadway Plaza would be the county’s tallest building.
Keeping the preleasing rule would force Harrah to lease half of the building at current depressed rates, he said.
Office rents are 25% or more below where they were a few years ago.
Harrah contends he would be better off building the massive tower on speculation.
“This really is the poster child of ‘build it, and they will come,’” he said.
The city also gave Harrah more time to pay for traffic studies, according to a report in the Orange County Register.
But councilmembers declined to allow him to seek subsidies for the project through Santa Ana’s redevelopment agency.
Harrah had sought about $1.5 million in yearly tax incentives, which would run for about 10 years and help offset some costs associated with building and leasing the building in a down market.
Preparatory work is done at the site of One Broadway, which otherwise has been idle for years.
Telecommunications companies, television stations, law firms and government agencies all have been floated by Harrah as possible tenants at the building, which has yet to announce any leases.
Source: www.ocbj.com
Tags: business, lease, market, office, orange county, rate, Real, rent, Report, Tenant
Posted in Real Estate News | No Comments »
Thursday, July 15th, 2010
The three biggest, most common and risky mistakes tenants make when renewing or renegotiating their lease are:
1. Not developing alternatives to the lease they are negotiating.
2. Leaving it too late to negotiate and/or move if necessary.
3. Trusting the landlord’s broker to negotiate a “good deal” for them.
Once a landlord believes the tenant is planning to stay, does not have time to move or is prepared to let the landlord’s broker represent them, all negotiating leverage is lost and the landlord is in control. So, even if you plan on renewing your lease, you must find alternatives to your existing lease to show the landlord you have other options and that he could lose you to a competitor. The easiest and most effective way to do this and regain control is to hire a tenant representation broker to represent you on your lease renewal, research other options and create the negotiating leverage and freedom for you to move if you choose to. Besides, your broker will do all the work and they simply share the landlord broker’s fee, which is paid in full whether you are represented or not!
We can renew or renegotiate your commercial real estate lease at almost any time and create opportunities for you to benefit from substantially reduced occupancy costs, greater operational efficiency and flexibility to grow or downsize, as well and realigning your real estate with your business plan.
Below are just some of the benefits our expert negotiating skills have proven successful in achieving for our clients:
1. Expand or downsize your premises
2. Reduce base rent and operating expenses
3. Lock in fixed rents and operating expenses long term
4. Reduce or remove security deposits, personal guarantees or letters of credit
5. Eliminate operating expense pass through charges
6. Secure landlord dollars to expand or improve your facilities or buy new equipment
7. Revise obsolete or onerous leases and lease terms
8. Secure favorable rights and options to expand, contract, purchase the building, extend or terminate your lease
9. Resolve disputes between you and your landlord
Landlords often discourage tenants from seeking tenant representation so they can negotiate higher rents and lease terms that are onerous to the tenant. The landlord’s broker may also discourage you from hiring your own broker so they don’t have to share their fee.
Furthermore, lease renewal terms offered to existing tenants are often less attractive as lease terms offered to new tenants. This is because landlords know that a tenant that doesn’t have a tenant representation broker to advise them on the most attractive lease terms achievable is more likely to accept the landlord’s terms and assume they are getting a “fair deal” and less likely to take advantage of more beneficial lease opportunities elsewhere. So while you may have a good relationship with your landlord and believe you are getting a great deal on your lease renewal, beware!
No matter how good you think your relationship is with your landlord, he is in the business of maximizing his profits by getting the most rent possible, period. Until you create competition for your tenancy and hire an experienced tenant representation broker, your landlord will consider you a captive tenant, willing to pay asking or above-market rents on your lease renewal or renegotiation.
Lease renewals and negotiations can be complicated and time consuming. There’s much more to negotiate than just the rent. And how do you know you’re getting the most attractive lease terms anyway? Parking charges, operating expense pass throughs and add-ons, security deposits, tenant improvement allowances and endless complicated and misleading lease terms and conditions, with far reaching financial and operational implications, are all up for negotiation. Only with the benefit of a tenant representation broker can you be guaranteed exposure to every opportunity and the negotiating power to secure the best terms available on your lease renewal or renegotiation.
Our proven lease renewal process provides you with the strategy, market knowledge and negotiating expertise to guarantee you access to every alternative option available in the marketplace and advise you on the most attractive lease terms achievable on a lease renewal or renegotiation. We firstly audit your lease to determine the options available for reducing your occupancy costs and building flexibility into your lease to achieve your business goals. We then create significant negotiating leverage with your landlord by identifying competitive alternative opportunities to secure the most cost-effective, risk-free lease terms possible on a lease renewal or renegotiation. We do all this in a professional manner that won’t damage your relationship with the landlord.
We also manage the entire process from start to finish so you don’t have to, saving you valuable time and mney and exposure to risk while you focus on running your business
To learn more about how you can renew or renegotiate your office lease to significantly reduce your occupancy costs by up to 30% and solve your space problems, click HERE or call Stefan Rogers at (949) 263 5362.
Tags: building, business, buy, clients, commercial, cost, estate, exposure, financial, help, interest, landlord, lease, legal, market, money, negotiate, occupancy, office, opportunity, process, professional, purchase, rate, Real, Real Estate, reduce, rent, risk, rogers, space, Tenant, Tenant Representation, time, voit
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Thursday, July 1st, 2010
Unlike brokers that represent landlords and owners, Tenant Representation brokers specialize in representing the best interests of tenants and space users only on the lease and purchase of commercial real estate.
The value a business can gain from hiring a tenant representation broker to handle its corporate real estate, just as it would hire a CPA for financial and an attorney for legal matters, is so significant, it’s essential every business owner understands the benefits. With real estate typically being a business’s second largest expense, companies can’t afford to overlook the benefits of professional tenant representation services when thousands of dollars are ultimately at stake.
Companies that employ an in-house corporate real estate director to manage their real estate, or outsource their needs to a professional tenant representation advisor, avoid wasting significant money and time that would otherwise be converted to profit!
There are no savings to be had by not hiring a tenant representation broker.
Every listing agreement compensates the landlord’s broker with an industry standard fee, which the landlord’s broker shares with the tenant’s/buyer’s tenant representation broker if they have one. This incentivizes the landlord’s broker to find a tenant that isn’t benefitting from their own tenant representation broker, because the landlord’s broker will receive the entire fee for negotiating against them! There is no discount to be had by not hiring your own tenant representation broker so you should take advantage of this service because the full commission WILL be paid on every listing whether you are represented or not. Furthermore, our negotiating expertise and intimate knowledge of commercial real estate has proven to save clients an average of 30% in occupancy costs, several times greater than the full listing fee!..Click HERE to view the full article.
Tags: business, buy, clients, commercial, corporate, cost, estate, industry, landlord, lease, legal, listing, money, occupancy, office, owner, purchase, rate, Real, Real Estate, requirement, save, services, space, Tenant, Tenant Representation, time, value, voit
Posted in Corporate Real Estate Strategies | 2 Comments »
Monday, June 28th, 2010
This is one of the most important real estate decisions you’ll ever make for your business!
Why? Because if you’re not familiar with how long the commercial real estate leasing or buying process takes, you’ll likely get it wrong. Get it wrong, and you’re in trouble!
I get calls every day from businesses wanting (needing!) office space and they’re ready to “sign a lease tomorrow”. No you’re not! I had three yesterday, hence my urge to post this blog.
Quite simply, the old adage applies..“Failing to plan is planning to fail” and I can’t emphasise enough how crucial it is be proactive and always have a real estate strategy that fits yor business plan so you’re not left high and dry when your lease expires sooner than you thought.
Your business’s real estate is a critical part of your business operations, otherwise you’d do without it; because it’s not cheap! So when it’s time to deal with your corporate real estate you must allow plenty of time to prepare a real estate strategy, understand your options in the marketplace, search for real estate and qualify locations, negotiate and close, do tenant improvements, relocate and get back to business.
Otherwise, you risk making rushed decisions and settling for real estate options that are far from ideal and perhaps restrict the ability for your business to thrive, you’ll waste valuable man-hours running scrambling to find a new location, you’ll lose every ounce of negotiating leverage with a landlord because he’ll know you need the space “tomorrow”, AND it will stress you out!
So don’t procrastinate. Your real estate wont take care of itself. If you’re putting off the process because you don’t have time or don’t know where/how to start, hire a tenant representation broker to do all the leg work for you so you can focus on your business and not worry about your real estate.
Below is a guide to the typical minimum time frame needed to successfully complete the real estate leasing or buying process from start to finish for various sizes of space. Typically, the larger your requirement, the longer it will take.
1,000 SF – 5,000 SF = 3-6 Months
5,001 SF – 10,000 SF = 4-9 Months
10,001 SF – 20,000 SF = 6-10 Months
20,001 SF – 50,000 SF = 8-15 Months
50,001 SF – 100,000 SF = 15-24 Months
100,001+ SF = 24+ Months
When asked, I tell every client, “It always takes longer than you think”, and I regret to say that I’ve been right almost every time.
Tags: business, buy, commercial, landlord, lease, market, negotiate, office, office space, planning, process, rate, Real Estate, requirement, risk, search, space, Tenant, time
Posted in Corporate Real Estate Strategies | No Comments »
