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Commercial Real Estate Lease vs. Purchase

Is it best to lease or purchase commercial space? The type of business you have, your future goals, your financial resources and the conditions of your local commercial real estate market are some of the factors you’ll need to consider. Reasons to Purchase The purchase side of the lease vs. purchase equation usually comes into play when your company’s needs are fixed and predictable for the long term. If you know that your needs won’t change for at least a decade or more, purchasing can be a good option. It gives you total control over...

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Signing a Lease for Commercial Space? Follow These Tips

  Many times, finding the right space for your business is the easy part. Negotiating a commercial lease, on the other hand, can be quite difficult. Follow these basic guidelines to avoid signing the wrong lease.     1. Consider the Length of the Lease Keeping you in your space for a longer period of time is something landlords encourage because it’s advantageous for them. There are some instances where a longer term lease is a smart business decision for your company – you may be able to save big on your monthly rent. On...

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Questions to Ask Before Choosing Your Commercial Real Estate Advisor

 Choosing a commercial real estate broker/advisor to serve as your tenant representative can be a challenge. Asking the right questions can help determine whether or not a broker is a good fit for you. Here are six good ones and some guidance on what to look for. 1. Does your firm focus exclusively on tenant representation or do you also represent landlords? If the answer is “we represent both” then there is an inherent conflict of interest. To insure that your best interest aligns with that of your advisor, choose a firm that focuses exclusively on...

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The 3 Most Commonly Used Leases in Commercial Real Estate

  There are 3 basic types of leases used in Commercial real estate. They are all complex documents but can be understood when you have some background about the terminology associated with each of them. The three types of leases are: 1. Gross Lease  With a gross lease, also known as a full service lease, the rental rate includes all of the operating expenses for a property, such as the utilities, maintenance, property taxes and property insurance. If these expenses increase over the term of the lease, the landlord typically passes through the incremental cost to...

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Did I Budget For That?

  If you’re planning to lease commercial space, you’ll need to be very strategic in your approach in order to get the best terms in your lease agreement. First and foremost you’ll want to start with a budget. We’ve listed some helpful #cre budgeting tips below. Rent: This is obvious but just one component of your budget. Your tenant advisor will know current rates for the particular property type and submarkets you’re considering and whether you can expect an annual increase. Moving costs: Budget for the costs associated with moving furniture and equipment, including IT,...

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What You Need to Know About Rent Escalation Clauses

  Rent escalation clauses are standard in most commercial real estate leases. If your company leases space, your rents are probably set up to increase automatically over time. While escalations of 2%-3% per year might not necessarily seem like a big deal, they can actually have a large impact on your occupancy costs over the length of the lease. Lease escalations come in a few different forms. Some leases have a single payment that covers both a charge to the landlord for the use of space in his or her building and for the costs...

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Should I Stay or Should I Go?

  As the life cycles of businesses mature and grow over time it becomes necessary to re-evaluate your office space when your lease is coming up for renewal. Square footage requirements factor as just one component of the decision process to remain where you are or look for new space. A comprehensive evaluation also includes the following issues in today’s modern business atmosphere and serve as a guide to stay or go. 1. Are You Using Your Square Footage Efficiently? Take a hard look at where your business is now and where it’s likely to...

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What is CRE Dual Representation?

 If you’re involved in any leasing/purchasing real estate process it’s likely you’ve come across the term “dual representation” and it’s basically this: dual agency representation happens when the same broker or firm represents both the tenant and landlord in the same transaction. It’s common to find this happening when big firms are involved in the process. What might seem like an ideal solution at the time can cause problems during the transaction because it’s not possible to represent both parties fairly in dual representation real estate transactions. There are too many conflicts of interest between...

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Here’s What You Should Know if Your Building Has Been Sold

 If you occupy a building that’s been sold, be aware of the following changes. One immediate change that can happen is you will have a new property manager. If so you’ll be notified of the change of address under the notices provision of your lease. Going forward all rent payments and correspondence will need to go to the new landlord or landlord agent. However, under new ownership your lease terms do not change. Your lease is a legally binding document until it expires. Before the sale finalizes you will be asked by your current landlord/seller...

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What Should You Expect From Your Commercial Real Estate Advisor?

 The logic behind a commercial real estate advisor who specializes in tenant representation is that in order for a tenant to secure the best possible contract terms they will need access to market information, transaction expertise and negotiating skills equal to that of the landlord who utilizes professional representation. Tenants should look for a real estate advisor who specializes in tenant representation with the appropriate market knowledge, relative experience and most importantly is someone they can trust to assist them with an important business and financial decision. Your advisor should: Be willing to invest the...

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