News Flash! Heisman Winner Signs NFL Contract Without an Agent
February 7th, 2012
Doesn’t seem likely does it? I’m sure you know why…What chance would a kid coming out of college have when negotiating against an NFL franchise owner or GM who negotiates these deals all day long? The fact is that more than 95% of all professional athletes are represented when negotiating professional contracts. They also don’t let the owner’s representative do it. Professional athletes make sure they’re represented by someone who wants to see them get the best deal.
All of this seems rather obvious doesn’t it? (You know where I’m going with this, right?) So how come this isn’t as obvious to astute businessmen and women when they attempt to negotiate a lease directly with a landlord? I was reminded of this again today as I was reviewing a new client’s existing lease (one he is wishing to exit by subleasing his current space). The sublease clause in his lease reads as follows: “Landlord may withhold consent to sublease for any reason or no reason.” Wow! That put a little bit of a crimp into his exit strategy, didn’t it?
Not only did they not use a broker to represent them in this lease, they didn’t use an attorney to review the lease before they signed it. Why no attorney, you may ask? You’re gonna love this one…the client is an attorney. Every word of this is true. The blog wrote itself today!
All of this is to remind you that a tenant rep is the smart way to go for smart business owners. Here are just a few good reasons:
- You won’t be distracted by this process and will be able to focus on running your business.
- A good tenant representative will make sure that you receive the most favorable lease terms (not limited to dollars per square foot, but to the entire deal, which will be aligned to your business needs)
- Your experience in negotiating leases is probably limited to once every three to five years.
- Prospective landlords know the market, their competition, and your next move better than you do.
There are many more reasons to hire a tenant rep, just ask us!
Posted in Long Island Market, Opinions/Advice, Tenant Representation | 1 Comment »
Who is influencing your Broker?
January 12th, 2012
I’m often asked about broker’s commissions and how broker’s loyalties are affected by them. If you’ve ever hired Cresa or are familiar with our philosophy, you know that we are driven by one thing; “Do The Right Thing” for our client, the corporate user. Sometimes I forget that “doing the right thing” is a big deal. Then, I get an email like the one below!
I would think that most tenants want their broker to be compensated fairly, but a trip to Hawaii and a new Mercedes? As a tenant, you would have to ask yourself “Is this really the right space for me, or am I in this building because my broker wanted a new car?”
In a nutshell, this is one of the most important reasons to use a tenant rep – no conflict of interest. A Cresa advisor would not accept any incentive from a landlord. In addition, they would make sure the value of the incentive being offered was applied to your benefit (in the form of reduced rent or additional free rent, etc.).
And to those who still believe that a broker’s involvement will cost tenants money; clearly the landlord has included this inducement in his leasing costs, whether the tenant shows up with a broker or not. The benefit that the landlord derives from an unrepresented tenant usually goes into his pocket, not yours.
Tags: commercial real estate, landlord, lease, long island, office space, rent, tenants
Posted in Long Island Market, Opinions/Advice, Tenant Representation | No Comments »
Where did I put that Lease?
November 17th, 2011
Here’s the scenario: You just realized that your lease will be expiring in a few months and you start to think about what that will mean. For the most part, your current space works for you. You might need more open space or a couple of additional offices; the carpet is starting to show some wear; the walls have been marked up a bit. But, it’s close to home and you have a comfort level (the car practically drives itself to the office). You also remember the nightmare of moving and the disruption to your business.
So…now what. You didn’t get into business to have to worry about this stuff, but now you need to. You decide there is plenty of time to address this and go about doing “more important” things.
At the same time, you begin to notice all of the “Available Space” signs on your way to and from your office. You call one or two of them and discover that although there is a sign in front of the building, there isn’t necessarily any space that would suit your operation, but the broker representing the building would be happy to show you other buildings. It then occurs to you that those signs never really come down and that they are really just a lead generation system for the broker.
More time goes by and brokers are calling you every other day to pitch you new space or tell you how much free rent they can get you. Nobody has really taken the time to evaluate what your business needs are and how they can be aligned with your real estate needs.
It all becomes a little overwhelming and with about 30 days left on your lease, you contact your current landlord and “ask” him if you can renew your lease. He says, “Sure, I’ll send you a renewal letter, just sign it and you’ll be good for the next 5 years.”
Wow, talk about the path of least resistance. You think to yourself, “Done deal”. You read it, you notice the part about continued escalations (seems reasonable), you sign it, and it goes back in the drawer for another 4 and a half years.
You, my friend, are a Landlord’s dream come true!
You may have saved some time, but it came at a very high price. Here are just a few of the items that a tenant rep would have negotiated for you:
- Lower rent (those continued escaltions in the renewal have committed you to rent that is well above the market)
- Rent abatement (free rent)
- Refurbishment allowance (new carpets, paint, move partition walls, etc.)
- New base year for real estate taxes
- Reduce or enlarge space (per your needs)
- Lower esacalations
You rationale that your landlord would not want a broker involved is accurate. I’ve just shown you why. It’s not because he doesn’t want to pay a broker’s fee (though he probably doesn’t). It’s because many of the countless clauses you are not equipped to negotiate, are his profit centers.
And by the way, some Landlords are more than willing to pay a broker’s fee, even on a renewal. Some even insist on it to ensure that the broker is not motivated to move the tenant out of their current space.
Bottom line: Give yourself plenty of time to determine the best real estate strategy for your business. That usually means at least one year, if not more depending on the size of your space.
Tags: landlord, lease renewal, office space, rent, tenant
Posted in Long Island Market, Opinions/Advice, Tenant Representation | No Comments »
Pick the Low Hanging Fruit First
October 13th, 2011
We’re all getting used to seeing headlines that read something like “New LEED Building Under Construction”. It’s really great to see and we are obviously moving in the right direction. If you’re going to build a new building, of course it will have plenty of sustainable elements (regardless of whether or not it is LEED Certified). It just makes economic sense and anything less is not environmentally or socially responsible. However, there is a much bigger opportunity right under our noses that has been virtually ignored in the midst of this green frenzy. Existing buildings and existing tenant spaces offer tremendous green potential on Long Island. Consider the following:
- There is approximately 40 million square feet of existing commercial office space on Long Island.
- In most years, approximately 1 million square feet of office space is added through new construction.
- In the current economic climate, Long Island developers have been dramatically reducing the amount of new construction.
Do the math; the glaring opportunity on Long Island is to create green tenant spaces within our existing buildings and begin using green practices to maintain our existing buildings. In most other parts of the country, things are a little different. If you live in Omaha or Phoenix or many other land-locked cities, you just create a little more sprawl and build a new building. Long Islanders don’t have that option (thankfully). On an island, the amount of land is obviously something that is finite. We are not building any more land here.
The USGBC’s LEED (Leadership in Energy and Environmental Design) Rating system offers two LEED ratings specifically for these circumstances. LEED for Existing Buildings: Operations and Maintenance provides a benchmark for building owners and operators to measure operations, improvements and maintenance. LEED for Commercial Interiors gives the power to make sustainable choices to tenants and designers.
Both of these LEED “flavors” can be achieved for much less than new construction. In the case of existing buildings, changes in many of the routine maintenance items can make big differences in the operating expenses of a building. These savings will be critical to commercial landlords as we endure difficult economic conditions. No matter how green, construction of a new building has a more detrimental impact on the environment than refitting an older building, or simply making changes to the operating and maintenance procedures.
The vast majority of Long Island Businesses are Tenants, not property owners; and there are still lots of options to create green spaces within buildings that aren’t the greenest buildings on earth. For tenants who are considering a move or about to renew their lease, LEED for Commercial Interiors focuses on employee productivity, health and comfort, as well as operating expenses. In an age where retaining and recruiting great employees is essential for success, it makes sense for tenants to incorporate green practices throughout their enterprise.
For Long Island, the best green building may be the one you’re in now.
Tags: existing buildings, green buildings, LEED, long island, sustainability, tenants, usgbc
Posted in Green Buildings/Sustainability, Long Island Market, Opinions/Advice, Tenant Representation | No Comments »
Two minute drill – It’s not just the rent…it’s the occupancy cost.
September 23rd, 2011
This very brief presentation uncovers some of the many areas in your lease where landlords profit. They are, of course entitled to a profit, but as I have said before “We think it should jingle, not fold”. We’d love the opportunity to speak with you about it.
Just click the arrow below to move through the presentation.
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Posted in Long Island Market, Opinions/Advice, Tenant Representation | 1 Comment »
The Trend of Shrinking Office Space
August 12th, 2011
Replacing your bulky old furniture can be a great way to refresh your office space and save money too! But it’s amazing how many people think they are saving money by buying used furniture.
Here is a short presentation on some of the potential financial benefits of changing out your old stuff for new. We’d love to take a look at your operation and see if some of these ideas might be a fit.
Just click on the arrow below to move through the presentation.
Posted in Opinions/Advice, Tenant Representation | 2 Comments »
