Best Practices – Mobiliti CRE https://mobiliticre.com 100% Tenant Representation Mon, 15 Aug 2022 16:24:20 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.7 https://mobiliticre.com/wp-content/uploads/2020/09/cropped-mobilitifav-32x32.jpg Best Practices – Mobiliti CRE https://mobiliticre.com 32 32 Insider Tips for Getting the Best Bargain on Lease Renewals https://mobiliticre.com/2022/08/15/insider-tips-for-getting-the-best-bargain-on-lease-renewals/ Mon, 15 Aug 2022 16:22:46 +0000 https://mobiliticre.com/?p=1217 Many tenants assume their commercial real estate lease will be renewed on reasonable terms and leave an insufficient amount of time for the renewal to be negotiated. Unfortunately, landlords frequently offer renewing tenants terms that are not as good as those offered to new tenants. The landlord knows that new tenants are in the market shopping […]

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]]> Many tenants assume their commercial real estate lease will be renewed on reasonable terms and leave an insufficient amount of time for the renewal to be negotiated. Unfortunately, landlords frequently offer renewing tenants terms that are not as good as those offered to new tenants. The landlord knows that new tenants are in the market shopping around and that to attract new tenants, the landlord must be willing to match the competition in terms of rental rate, free rent, utilities, tenant improvements, building systems, communications, security systems, electrical capacity, lobby appearance, and other factors. However, if you are a tenant interested in a lease renewal, the landlord presumes – and tends to be right – that you are not shopping around.

Insider Tips for Getting the Best Bargain on Lease Renewals

Here’s a proven strategy for getting the best terms on lease renewals — even if you are 100% committed to staying at your current location.

Use time to your advantage.

You need to start early enough so you have time for all the normal phases of site selection, financial negotiation, and analysis, lease negotiation — plus time to walk away from a bad deal and continue negotiations elsewhere if need be. This means that if you plan to renew at your current location, you should be actively assessing your options at least 12 and preferably 18 months before your target move-in/renewal date.

Understand your options in the marketplace.

If you don’t have a good idea what lease terms other tenants in the market are getting now, then you have no way of determining whether a landlord’s renewal proposal is a good deal or a bad deal. Your landlord’s offer could easily be less generous than what other tenants in your building or your submarket are getting. In that case, it would qualify as a bad deal even though it might be an improvement over your original lease. A good tenant rep broker can update you on market rates, concessions, and incentives.

Use your inside knowledge of your current building and/or landlord’s operations to formulate the terms of commercial lease renewals.

As a long-time resident of the building where you plan to renew, you have a key advantage that can help you secure improved lease terms. You know the physical characteristics of the building and how it has functioned in the past. If you have always been dissatisfied with the way the common area lavatories look, elevator waiting times, how the HVAC system functions, etc., your tenant representation broker should be specific about these issues in negotiating commercial lease renewals.

Let your landlord know you are actively seeking alternative locations.

Preserving good relations with a current landlord is often cited by tenants as a reason for “going it alone” when it comes to negotiating a lease renewal. The unfortunate effect of such a strategy is that it reinforces ownership’s belief that you have no options and don’t take the prospect of lease negotiations seriously. It’s a clear sign that you are prepared to settle for whatever is offered. When a landlord understands that you are touring other locations with a broker, they are likely to become more realistic about what your lease renewal is worth.

Understand what it will cost your landlord if you move out.

It is a fact that if a tenant moves, the landlord will incur substantial costs. Those costs include lost revenue, promotional costs, brokerage commissions, infrastructure refurbishment, demolition costs, and build-out costs. In every situation, these costs can be quantified with a high degree of accuracy and should be part of commercial lease discussions with the landlord to maximize the value you get as a renewing tenant.

Be prepared to move if you can’t get market-rate terms.

Ultimately, if your analysis of the market indicates that by moving you will incur substantially lower costs over the term of the lease, this is probably the option you should select. Moving for marginal savings – 2% or 3% — might not be warranted, but if projected savings are 10% or more, this is likely to be your better option.

For more information on lease renewals, contact us today. At Mobiliti CRE we focus 100% on representing tenants with relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, flex and industrial space.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

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]]> How to Right Size Your Office Space and Improve Your Bottom Line https://mobiliticre.com/2022/02/07/right-size-office-space-improve-bottom-line/ Mon, 07 Feb 2022 21:29:33 +0000 https://mobiliticre.com/?p=1196 Let’s face it, rent can drastically impact a company’s bottom line.  In fact, for most companies, commercial real estate leasing expense is typically the second-largest expense following salaries.     With many employees working remotely or on a hybrid basis it is more important than ever to lease both the right amount of space and the most […]

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]]> How to Right Size Your Office Space and Improve Your Bottom Line

Let’s face it, rent can drastically impact a company’s bottom line.  In fact, for most companies, commercial real estate leasing expense is typically the second-largest expense following salaries.     With many employees working remotely or on a hybrid basis it is more important than ever to lease both the right amount of space and the most efficient space possible.  Below are some tips to help you determine how much commercial office space you really need.

Poll Key Personnel

To determine how much space is necessary, begin by polling key personnel and the heads of various divisions to determine how many employees are actually coming in, on what days, and how they are using the space.  Next poll the same personnel to determine how your existing space functions.  There should be a discussion regarding your current layout, what works well and what should be modified based on changes to your organization, industry, etc.  Size is a key consideration, but sometimes less is more if you are providing optimal design efficiency.

Controlling Rental Costs

There are essentially two ways to control rental costs:

  • Minimize the cost per square foot; and/or
  • Minimize the amount of space leased. Many companies focus solely on price per square foot and end up leasing excess space.

Even in a market favoring tenants, there is a limit to how low a rate a landlord will offer.  By reducing unnecessary office space by 10 or 15 percent, your company can significantly reduce the total rent amount.  Tenants often find that a high-quality office building ends up saving them money even if the cost per square foot is higher.  This is because modern, higher-quality spaces are created with ergonomic principles designed for greater space efficiency.

Benchmarks: Square Footage Per Person

Use a benchmark of 200 rentable square feet per person to get started.  That is equivalent to a 14×14 bedroom.  Considering that a mid-sized cubicle is only 8×8 or 64 square feet, 200 might sound excessive, but that includes space for hallways, walkways, conference rooms, and a kitchen.

If your budget is tight, reduce the square footage to 125 square feet for a high-density open layout.  Feel free to visit www.mobiliticre.com and click on the Resources tab in the top right of the home page then click on Office Space Calculator.  This will give a rough idea of how much space you will need.  Note you will need to know the common area factor for the building (See below).

Related: Do These 5 Things Before a Major Office Move

Have a Furniture Dealer Lay Out The Space

It can be difficult to imagine how much space your staff needs.  Fortunately, there is a free and easy solution. Most potential landlords can provide you with an empty architectural floorplan or CAD file.   This floorplan can be taken to an office equipment dealer, who will lay out an office plan for free in the hope of earning your future business.  The floorplan can then be manipulated on a computer using an image editor like Photoshop.

Review Loss Factors to Compare Each Building’s True Overall Cost

One of the most significant areas impacting the size of space you need and therefore your overall cost of occupancy has to do with the loss factor of one space versus another.  With the exception of single-tenant office buildings, flex or industrial space, most multi-tenant office buildings have a loss factor.  Most commercial leases define the leased premises in terms of “rentable” square feet. Tenants often focus on the rental rate for those square feet. However, it is important to understand how the rentable square footage number was calculated and to compare potential spaces on a true “apples to apples” basis by calculating the “usable” square footage of a space.

Comparing Usable to Rentable Square Footage

While a lease will commonly only reference the rentable square footage of the premises, the tenant’s broker should also determine the usable square footage of the premises. Usable area is considered the space that a tenant can personally occupy (as opposed to shared common areas).

Useable square footage is measured from the interior wall to the interior wall of the leased premises. Usable square footage does not include common areas such as shared restrooms, the building lobby, stairwells, janitorial rooms, mechanical rooms or hallways. For tenants leasing an entire floor or multiple floors, the usable square footage of their premises would include the hallways and restrooms exclusively serving their floor(s).  The rentable area of premises is broader than the useable area and includes a tenant’s share of space in the building deemed beneficial to the tenant even though the tenant does not have exclusive possession of such space. The rentable square footage of leased premises includes the tenant’s share of the building’s common areas such as lobbies and other non-rentable spaces such as mechanical areas, bathrooms, and staircases.

Rental Rates

Rental rates are typically quoted on the basis of rentable square footage. Operating costs, taxes and insurance costs are usually based on rentable square footage as well. The increase in a premises’ square footage above the area that a tenant exclusively controls is often referred to as the “load factor,” “loss factor” or “add-on factor.”  For example, consider a building that contains 300,000 square feet of floor area, of which 260,000 square feet is an area that can be used and occupied by tenants and 40,000 square feet is the common area (common restrooms, lobbies, hallways, utility rooms, etc.).

The 40,000 square feet of the common area is spread over the 260,000 square feet of usable area to determine the building’s loss factor. In this case, the building’s loss factor would be 15% (300,000/260,000) or 15%.  A 15% load factor would mean that a space with a usable area of 30,000 square feet would have 34,500 rentable square feet (30,000 x 1.15 = 34,500).  A building with a low load factor can save a tenant money (or provide a tenant with more usable square feet) as compared to a building with a high load factor.  The implications of a higher load factor are easiest to observe through an example. A tenant is considering two offices in two different buildings.

Option A is an office of 5,000 rentable square feet in a building with a loss factor of 20 percent. Option B is an office of 5,000 rentable square feet in a building with a loss factor of 15 percent loss factor. Both options specify 5,000 rentable square feet and an identical rental rate. However, a savvy tenant broker would calculate the usable square footage of Option A versus Option B. Option A contains only 4,166 usable square feet while Option B has approximately 4,348 usable square feet. While the rent for both locations is the same, the tenant gets an additional nearly 182 square feet of usable space in Option B.

Tenants should be careful to compare the rental rates of prospective premises on the basis of usable area, since that is the space that they will have the exclusive right to use and occupy for their business. An “inefficient” building with a high loss factor can cost a tenant more per usable square foot than a tenant realizes, but a tenant may determine that a higher loss factor is worth the added cost due to the larger, more elaborate lobbies and common areas that some high loss-factor buildings provide.  The loss factor in most office buildings ranges from between 10 and 20%. Next week we will discuss things you can do to ensure that your commercial real estate office tour is as productive as possible.

Office Space Calculator

At Mobiliti CRE we focus 100% on representing tenants with relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, flex and industrial Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

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]]> Score the Perfect Locale for Your Business with These 10 Insider Tips https://mobiliticre.com/2021/12/08/score-the-perfect-locale-for-your-business-with-these-10-insider-tips/ Wed, 08 Dec 2021 20:47:45 +0000 https://mobiliticre.com/?p=1182 Selecting the right commercial real estate for your business can have a profound impact on your company both in purely financial terms and in terms of attracting and retaining the best and the brightest talent From a financial perspective, rent is generally the second-largest expense (following employee compensation) in a company’s monthly budget. Selecting the […]

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]]> Selecting the right commercial real estate for your business can have a profound impact on your company both in purely financial terms and in terms of attracting and retaining the best and the brightest talentScore the Perfect Locale for Your Business with These 10 Insider Tips

From a financial perspective, rent is generally the second-largest expense (following employee compensation) in a company’s monthly budget. Selecting the right amount of space, the most efficient space, and incorporating contraction and expansion rights into your lease can be critical to a company’s future success.

Choosing the right space involves more than just the bottom line. For your employees, clients and vendors, your space creates the first impression they perceive of your company. Selecting the right aesthetics and design can boost employee productivity, moral and retention.

The typical office tenant only participates in the lease process every five to ten years. For small to mid-sized tenants who do not have in-house real estate personnel, the process of locating the right space and obtaining the best terms can sometimes be frustrating and somewhat mysterious.  Before heading out to tour commercial real estate consider each of the following factors.

  1. Cost.  While cost isn’t everything, it is obviously an important consideration.  Savvy tenants prepare a budget before they start looking for space.   Aside from your own budget you need to consider how expenses relating to the space will affect your customers and employees.  For example, is parking free or do employees and customers need to pay to park?  Will increased rental costs need to be passed on to customers?
  2. Customers.  The space needs to be convenient for your customers, or it won’t work. If you are not in a convenient location for customers, you will lose business.
  3. Employees.  In today’s tight job market and with the trend towards remote work it is difficult to get employees to come into an office period.  If you select a location that is inconvenient for the majority of your workforce or the space is dingy, cramped or dated you will have difficulty attracting and retaining top talent.
  4. Strategic partners.  Are you in a field like tech where strategic partnerships are valuable?  If so, you may want to locate your business near potential partners.
  5. Cachet. Would a ritzy address add credibility or attract wealthier or more established clients? If so, the additional rental expense may be well worth it.
  6. Traffic.  If you have a retail business, a highly trafficked area is critical for success.  If you are an office user, it’s more of a nuisance.
  7. Convenience.  Is the space easy to find? Is there adequate parking close by? Think of customers and employees.
  8. Safety.  How safe is the neighborhood?  Is the parking close by and safe at night?  Does the property have security and key card access?
  9. Facility requirements.   Does the company have any special needs, such as high ceilings, higher than average power consumption or require a loading dock?
  10. Zoning. Many cities have zoning requirements that restrict certain businesses from operating in a particular location.  It is important that you verify that your use is permitted before you sign a lease.

Before you start the process of looking for commercial real estate for your business it is important to consider all of the items mentioned above.

At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space as well as commercial real estate in Tampa.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

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]]> How New Cellular Technology Will Impact Commercial Real Estate https://mobiliticre.com/2021/09/08/how-new-cellular-technology-will-impact-commercial-real-estate/ Wed, 08 Sep 2021 18:53:05 +0000 https://mobiliticre.com/?p=1139 You have probably heard references to 5G.  5G stands for the fifth generation of cellular technology.  When fully rolled out, 5G will be as much as 100 times faster than today’s 4G.  5G’s massive capacity will allow networks to accommodate more users at much higher speeds.  This will enable a so-called Internet of things where […]

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]]> You have probably heard references to 5G.  5G stands for the fifth generation of cellular technology.  When fully rolled out, 5G will be as much as 100 times faster than today’s 4G.  5G’s massive capacity will allow networks to accommodate more users at much higher speeds.  This will enable a so-called Internet of things where computers, smartphones, televisions, appliances, cars, etc. are connected to the Internet and thus to each other.  This massive capacity to transmit large amounts of data at lightning-fast speeds paves the way for new applications in autonomous vehicles, robotics, telemedicine, entertainment, and virtual reality, among others.

How New Cellular Technology Will Impact Commercial Real Estate:How New Cellular Technology Will Impact Commercial Real Estate

How Does 5G Differ from 4G?

5G technology uses a higher frequency band of the wireless spectrum.  This allows data to be transferred much more rapidly than the lower-frequency band dedicated to 4G.  The downside of 5G is that this higher-frequency band doesn’t travel as far.  The shorter wavelengths require smaller antennas attached to smaller cell towers spaced more closely together.  Although the existing network of large cell towers will still be used, 5G will require significantly more small cell towers attached to rooftops, light poles, and even inside buildings.  The United States will see hundreds of thousands of these small towers installed across the country over the next decade.

What does 5G Mean for Commercial Real Estate?

Benefits to Property Owners.

The rollout of 5G will create additional revenue streams for commercial property owners.  Given that 5G requires more antennas and boosters, property owners will be able to enter long-term leases for rooftop space with telecom providers.  These leases typically run from 10 to 30 years.

Property owners will benefit from instant monitoring of mechanical and electrical systems in their buildings which will enable quicker responses when problems occur.  In addition, because lights, HVAC thermostats and all other systems will be connected to the Internet and will be monitored and fine-tuned 24 hours a day, owners should realize substantial savings on operating expenses which could be passed on to tenants.

Related:  Tech Companies Relocations to Tampa Soar in 2021

Benefits to Tenants.

Tenants will enjoy a better user experience in buildings with 5G.  Online audio calls, video conferencing, cloud-based collaboration, and other activities that use a lot of data will become much faster.  This will make remote employees feel more connected to their offices.

Benefits to Investors and Developers.

More data centers will be needed because 5G and other new technologies require an enormous amount of computing power that takes up a lot of space on servers.  While much of the computing will be in the cloud, large data centers will still be needed to house those servers.  This will provide opportunities for data center developers and investors.

Timeline and Performance.

The US is currently in year 4 of what is expected to be a 10-year rollout of new infrastructure necessary to realize the full potential of 5G.  Studies by Deloitte have estimated that the initial 5G capacity in urban environments will be about double that of 4G LTE.  Whether an area ever achieves 100 times the speed of 4G will depend on a variety of location-specific variables including the number of cell towers and the density of users.

At Mobiliti CRE we focus 100% on representing tenants with site selection, office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

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]]> How to Prepare for an Office Move https://mobiliticre.com/2020/10/13/how-to-prepare-for-an-office-move/ Tue, 13 Oct 2020 14:31:43 +0000 https://mobiliticre.com/?p=956 Relocating your company office and prepping for an office move can be more complicated than one would initially expect. The larger the company, the more complicated the move will be.  When moving to a new commercial real estate property, a good first step is to form a relocation committee to assist with the planning and […]

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]]> Relocating your company office and prepping for an office move can be more complicated than one would initially expect. The larger the company, the more complicated the move will be.  When moving to a new commercial real estate property, a good first step is to form a relocation committee to assist with the planning and execution. Once your committee is formed, you can start checking relocation tasks off your list.How to Prepare for an Office Move

Ensuring that you hire the right moving company is critical. Your moving company will often be your most important initial contact with your new landlord, and it is important that the moving experience be a positive one for all parties involved. The following is a summary of some key points to consider with respect to the mover.

Selection of Mover.

Selecting the right mover is critical. A good way to start the process is to ask management at your current building and management at your new building for a list of recommendations. Investigate each of the movers carefully. It is also important to know the specialty of your mover. If you are a high-tech company, you do not want to hire a mover that specializes in moving low tech companies.  Make sure the mover walks the project and gives a detailed list of all materials. Get a detailed bid in writing.

Work with the Mover Prior to the Move.

Make sure your mover has reserved freight elevators on the appropriate time and date. Also, make sure your mover is aware of any floor and corridor protection requirements your new landlord may have in place. Continue to keep your new landlord up to date with any date and time changes. Make sure your mover is aware of the following:

  • Parking regulations outside the building.
  • Freight elevator hours.
  • Size of freight cars.
  • Configuration of the building (will they have to change elevators).
  • Special building rules and regulations.

Related: How to Get the Office Build-Out You Bargained For

Pre-Move Checklist.

  • Confirm that your company’s insurance covers the move.
  • Arrange and set up new phone and Internet accounts.
  • File a change of address with USPS.
  • Run an inventory of existing furniture and dispose of anything you do not need.
  • Order new furniture as necessary.
  • Leverage the pre-move internal committee to help employees prepare for and execute the necessary steps for the move. This includes preparing boxes with labels, cleaning up and purging old files, and distributing any new keys or access cards for the new facility.
  • Order stationery with the new address.
  • Make sure all permits and licenses are in place.
  • Send out change of address notices to clients, vendors and personnel.
  • Conduct team meetings with IT staff, design construction specialists
  • and the mover.
  • Change locks and passcodes at the new location and distribute keys to staff.
  • Confirm AC will be on prior to move.
  • Moving Day Checklist
  • Ensure computer equipment, phones, furniture and boxes are unplugged and ready to be moved.
  • Plan an emergency contact list to keep all parties in the loop and accessible on moving day.
  • Thoroughly clean out your old space as required by your existing contract.

With a little preparation and planning, your move to a new commercial real estate property can go smoothly.

At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

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]]> Thinking About an Office Move? Do These 5 Things First https://mobiliticre.com/2020/09/09/thinking-about-an-office-move-do-these-5-things-first/ Wed, 09 Sep 2020 20:27:02 +0000 https://mobiliticre.com/?p=859 ASSEMBLE A TEAM, A TIMELINE, AND A BUDGET The time required for a successful move depends on the size of the space required and the complexity of the new space. For an office user with 10,000 or more square feet, it is best to begin the process within 18 months prior to the expiration of […]

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]]> ASSEMBLE A TEAM, A TIMELINE, AND A BUDGETThinking About an Office Move? Do These 5 Things First

The time required for a successful move depends on the size of the space required and the complexity of the new space. For an office user with 10,000 or more square feet, it is best to begin the process within 18 months prior to the expiration of the current lease. It is critical to begin the process early enough to maintain leverage in lease negotiations and to be exposed to as many alternatives as possible.  Last week we discussed the importance of reviewing your existing lease prior to doing anything else.  Once you have done that it’s time to assemble the team, the timeline and the budget.

  1. Choose a Team Leader and Make them Aware of Management’s Goals. Being the point person on an internal office move can require a substantial time commitment. The team leader should be made aware of this and may need to delegate some of their normal duties to someone else during the search process. In addition, it is imperative that the team leader receives clearly defined goals and instructions from all decision-makers involved. Often the best choice for a team leader is the CFO, general counsel, head of facilities or an office manager.
  2. Assemble an External Team. The first step for the team leader should be to interview and hire a real estate broker. The broker can then assist in hiring other professionals such as architects, engineers, and construction managers.
  3. Clearly Define the Role and Responsibility of Each Member of the Team. The roles of each team member should be clearly defined, and they should be held accountable.
  4. Create a Project Schedule. The team leader, together with assistance from the broker, should create and maintain a project schedule that keeps everyone on track. The project schedule should outline each team member’s duties and should include key deadlines for completion and budgets. Staying on schedule will prevent you from moving too late and having to pay holdover rent or from moving too early and having to pay rent on two locations.
  5. Establish a Preliminary Project Budget. The budget should address costs for construction, if any, professional fees, furniture, equipment, moving costs and any other costs not covered by landlord concessions.

 

Next week we will discuss the process used to determine how much space is needed.

 

At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases.  We also assist businesses who are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance at 813-300-2227 or via email at pam@mobiliticre.com Here at Mobiliti CRE we assist both small and large investors as well as owner-occupiers with commercial real estate purchases.  

 

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]]> What is the Difference Between an Assignment and a Sublease? https://mobiliticre.com/2019/09/17/what-is-the-difference-between-an-assignment-and-a-sublease/ Tue, 17 Sep 2019 11:55:23 +0000 http://dev.heavisidegroup.com/mobiliticre/?p=157 Commercial real estate clients frequently ask how an assignment of a lease differs from a sublease.  The difference is primarily a legal one, although each achieves a similar practical result. Assignment.  An assignment of a real estate lease is a complete transfer of the right to be the tenant under the lease.  The third-party assignee […]

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]]> Commercial real estate clients frequently ask how an assignment of a lease differs from a sublease.  The difference is primarily a legal one, although each achieves a similar practical result.

Assignment.  An assignment of a real estate lease is a complete transfer of the right to be the tenant under the lease.  The third-party assignee becomes the “tenant” under the lease, taking over all of the leased premises, and is substituted for the old tenant. The new commerial real estate tenant pays the rent required under the lease directly to the landlord and is treated as the tenant under the lease for all purposes.  However, the catch is that the assignor tenant, unless released from liability by the landlord, remains liable for the obligations under the lease if the new tenant defaults. The old tenant can be sued by the landlord for back rent and other obligations imposed by the lease if the new tenant fails to pay or perform as required by the lease.  Given that a commercial real estate tenant who assigns a lease remains liable for the default of the new tenant, tenants should try to negotiate an automatic release provision.  Unfortunately, many landlords are unwilling to make this concession. An alternative strategy is to ask the landlord for a release if the proposed new tenant is of similar financial strength and creditworthiness.

Sublease. A sublease is a new lease agreement between the real estate tenant as sublessor and a third party as sublessee for all or a portion of the leased premises. The original commercial real estate lease between the tenant and the landlord remains in place, unaffected by the sublease. This means that the tenant remains liable for monthly rent under the original lease, while collecting rent from the subtenant under the sublease, which may be more, less or the same as the rent due under the main lease.

A sublease can be for less than all of the leased premises, while an assignment that transfers the entire lease must be for all of the premises. A sublease is a more involved transaction, as it requires a full sublease document between the commercial tenant as sublessor and the sublessee.

Reasonable Consent.  The landlord must be reasonable in consenting to the proposed assignment or sublease. Under Florida law a landlord cannot be unreasonable or arbitrary in withholding consent to an assignment or sublease. Nonetheless, it is still better to state in the text of the lease that the landlord will be reasonable.

In drafting an assignment or sublease clause, the tenant’s goal is flexibility. Being able to assign or sublet excess space with minimal interference from the landlord and minimal liability in the event the new tenant defaults can be a tremendous benefit to the tenant as the business climate changes from year to year.

When you need assistance with your commercial  lease in Tampa, FL and surrounding areas contact Pam Pester, Owner and President of Mobiliti CRE.  Mobiliti CRE is an independently owned commercial real estate company specializing in exclusive tenant and buyer representation.

 

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]]> Should You Sign a Short or Long Term Lease in Today’s Market? https://mobiliticre.com/2019/09/09/should-you-sign-a-short-or-long-term-lease-in-todays-market/ Mon, 09 Sep 2019 11:55:48 +0000 http://dev.heavisidegroup.com/mobiliticre/?p=159 Your commercial real estate cost is probably your second or third largest expense.  Following the simple rules outlined here will help you keep your costs low and maintain your competitive edge moving forward.

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]]> Tenants frequently ask whether it is better to sign a short or long term commercial real estate lease.  The answer is, it depends!

Most commercial real estate tenants sign long term leases in hot markets when optimism is high, business is booming, and the outlook is rosy, and sign short term leases in down markets when markets are skittish, confidence is low, and business outlook is unclear.  Although this seems somewhat logical, it is actually the opposite of what you should be doing.   In hot markets, real estate costs are also typically high, and signing a long term lease will lock in higher lease rates longer term.  Conversely, by signing only short term leases in down markets, you miss the ability to lock in low lease rates longer term, and risk your lease coming up for renewal in the future in a higher cost market.

So what should you do in today’s marketplace?  Prices have been rising across the country for the last several years with no end in site.  However, many economists believe economic growth may begin to slow in 2020.  For many commercial real estate tenants it may make sense to sign a shorter term lease in today’s market.  For tenants who can secure a reasonable rate and other suitable terms, it may still make sense sign a longer term lease if the tenant can negotiate a lease with a termination option.  This would allow the tenant to lock in a rate today while balancing the longer term risk should the economy or your requirements change.  Securing a 7 or a 10 year lease with termination rights at years 3 and 5 (and 7) would allow you to lock in a rate longer term, while still maintaining flexibility should your space needs change.

Prior to each of these future termination dates, you can re-evaluate your space needs internally and market rates in general and the option would then be either exercised (a much better and cheaper option usually than paying the remaining rent or trying to sublease the space); or, as is usually the case, use the termination option as leverage to renegotiate your lease to fix issues that have arisen during your tenancy.

Your commercial real estate cost is probably your second or third largest expense.  Following the simple rule outlined above will help you keep your costs low and maintain your competitive edge moving forward.

Mobiliti CRE is a commercial real estate brokerage that focuses 100% on representing buyers and tenants. We would be happy to review your commercial real estate lease on a confidential basis and discuss your options with you. We can be reached at (813) 300-2227 or feel free to email us at pam@mobiliticre.com.

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]]> Six Tips To Consider When Renewing Your Lease https://mobiliticre.com/2019/03/28/commercial-real-estate-lease-tips/ Thu, 28 Mar 2019 19:59:18 +0000 https://mobiliticre.com/?p=529 Proven tips for getting the best terms in your commercial real estate lease renewal -- even if you are 100% committed to staying at your current location.

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]]> Many tenants assume their commercial real estate lease will be renewed on reasonable terms and leave an insufficient amount of time for the renewal to be negotiated. Unfortunately, landlords frequently offer renewing tenants terms that are not as good as those offered to new tenants. The landlord knows that new tenants are in the market shopping around and that to attract new tenants, the landlord must be willing to match the competition in terms of rental rate, free rent, utilities, tenant improvements, building systems, communications, security systems, electrical capacity, lobby appearance, and other factors. However, if you are a tenant interested in a lease renewal, the landlord presumes – and tends to be right – that you are not shopping around.

Here’s a proven strategy for getting the best terms in your renewal — even if you are 100% committed to staying at your current location.

1 – Use time to your advantage.

You need to start early enough so you have time for all the normal phases of site selection, financial negotiation, and analysis, lease negotiation — plus time to walk away from a bad deal and continue negotiations elsewhere if need be. This means that if you plan to renew at your current location, you should be actively assessing your options at least 12 and preferably 18 months before your target move-in/renewal date.

2 – Understand your options in the marketplace.

If you don’t have a good idea what lease terms other tenants in the market are getting now, then you have no way of determining whether a landlord’s renewal proposal is a good deal or a bad deal. Your landlord’s offer could easily be less generous than what other tenants in your building or your submarket are getting. In that case, it would qualify as a bad deal even though it might be an improvement over your original lease. A good tenant rep broker can update you on market rates, concessions, and incentives.

3 – Use your inside knowledge of your current building and/or landlord’s operations to formulate the terms of your commercial lease renewal.

As a long-time resident of the building where you plan to renew, you have a key advantage that can help you secure improved lease terms. You know the physical characteristics of the building and how it has functioned in the past. If you have always been dissatisfied with the way the common area lavatories look, elevator waiting times, how the HVAC system functions, etc., your tenant representation broker should be specific about these issues in negotiating your commercial lease renewal.

4 – Let your landlord know you are actively seeking alternative locations.

Preserving good relations with a current landlord is often cited by tenants as a reason for “going it alone” when it comes to negotiating a lease renewal. The unfortunate effect of such a strategy is that it reinforces ownership’s belief that you have no options and don’t take the prospect of lease negotiations seriously. It’s a clear sign that you are prepared to settle for whatever is offered. When a landlord understands that you are touring other locations with a broker, they are likely to become more realistic about what your lease renewal is worth.

5 – Understand what it will cost your landlord if you move out.

It is a fact that if a tenant moves, the commercial real estate landlord will incur costs. However, the landlord will also incur substantial costs if you leave for more favorable terms elsewhere. For instance, potentially lost revenue, promotional costs, brokerage commissions, infrastructure refurbishment, demolition costs, and build-out costs. In every situation, these costs can be quantified with a high degree of accuracy and should be part of commercial lease discussions with the landlord to maximize the value you get as a renewing tenant.

6 – Be prepared to move if you can’t get market-rate terms.

Ultimately, if your analysis of the market indicates that by moving you will incur substantially lower costs over the term of the lease, this is probably the option you should select. Moving for marginal savings – 2% or 3% — might not be warranted, but if projected savings are 10% or more, this is likely to be your better option.

Mobiliti CRE is a commercial real estate brokerage that focuses 100% on representing buyers and tenants. We would be happy to review your commercial real estate lease on a confidential basis and discuss your options with you. We can be reached at (813) 300-2227 or feel free to email us at pam@mobiliticre.com.

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]]> What is a CCIM and Why Should You Hire One? https://mobiliticre.com/2019/02/12/what-is-a-ccim-and-why-should-you-hire-one/ Tue, 12 Feb 2019 14:03:08 +0000 https://mobiliticre.com/?p=504 Suppose you need to hire a commercial real estate broker and you don’t know any brokers nor do you have any recommendations. Learn more about the CCIM designation and how it can benefit you!

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]]> Suppose you need to hire a commercial real estate broker and you don’t know any brokers nor do you have any recommendations.  How do you find a broker that you know will provide a superior level of service with excellent skills and experience?  Fortunately you need look no further than www.ccim.com.

What is a CCIM?

A Certified Commercial Investment Member (CCIM) is a recognized expert in the commercial and investment real estate industry.  Of the more than 150,000 commercial real estate professionals in the United States, only an estimated 6 percent hold the CCIM designation.

The designation is awarded by the CCIM Institute to professionals who complete over 160 hours of graduate level courses and who pass a comprehensive exam covering financial analysis, market analysis, user decision analysis and investment analysis. In addition to completing coursework and passing exams, a CCIM must prepare a portfolio demonstrating practical real world experience.

Membership in CCIM allows a broker to compete with the big six global brokerages by providing independent brokers with access to a professional network of over 13,000 CCIM’s in 1,000 markets throughout the US and in 30 countries.  Membership in CCIM also provides member brokers with access to a suite of online technology tools provided through the CCIM website.

CCIM’s are an incredible resource to commercial real estate owners, investors and advisors and by hiring a broker with the designation, clients can rest assured that they are hiring a professional with a core level of commercial real estate competency and experience.

How do You Find a CCIM?

Go to www.ccim.com and in the upper right hand corner click “Find a CCIM”.

For any commercial real estate needs in the Tampa Bay area please reach out to Pam Pester, Esq., CCIM, President, Mobiliti CRE at pam@mobiliticre.com, (813) 300-2227, www.mobiliticre.com.

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