Leasing Tips – Mobiliti CRE https://mobiliticre.com 100% Tenant Representation Tue, 15 Jun 2021 17:34:48 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.7 https://mobiliticre.com/wp-content/uploads/2020/09/cropped-mobilitifav-32x32.jpg Leasing Tips – Mobiliti CRE https://mobiliticre.com 32 32 Why Lease Flexibility is So Important in an Uncertain World https://mobiliticre.com/2021/06/15/why-lease-flexibility-is-so-important-in-an-uncertain-world/ Tue, 15 Jun 2021 17:34:48 +0000 https://mobiliticre.com/?p=1106 Lease Flexibility – If we have learned anything over the last fourteen months, it is that global economic conditions can change rapidly.  The companies that will thrive moving forward are those that are nimble and can rapidly respond to those changing conditions.  We are just now emerging from the work from home experiment, and it […]

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]]> Lease Flexibility – If we have learned anything over the last fourteen months, it is that global economic conditions can change rapidly.  The companies that will thrive moving forward are those that are nimble and can rapidly respond to those changing conditions.  We are just now emerging from the work from home experiment, and it is still too soon to tell how this phenomenon will impact the office market. Why Lease Flexibility is So Important in an Uncertain World

Despite this continuing uncertainty, it appears that more companies than not will return to the office.  With rental expense typically the second largest item in any companies’ budget, it is imperative to negotiate as much flexibility into your commercial real estate lease as possible.  Tenants will need the ability to expand and contract over time.  The longer the term of the lease, the more flexible it will need to be. The following provisions can all contribute to increased flexibility.

Lease Term. 

One important factor to consider is the company’s projected growth. A startup company that expects to grow rapidly may not want to sign a long-term lease whereas an established company may be fine with a longer-term lease.

Another important issue to consider is the prevailing economic climate when the lease is signed. When economic conditions are strong, the cost of real estate is at the high end of the cycle. Signing a long-term lease in a strong climate could lock you into a high rent lease for years to come.  In a strong economy, it may be better to sign a shorter lease. Conversely, during a recession lease costs are at the low end of the cycle. This is typically a good time to sign a long-term lease. In the current climate, office leasing has been slow and vacancies have increased.  Most landlords are offering generous concessions.  For many tenants, it is currently a good time to sign a long-term commercial real estate lease in order to lock in favorable terms.  Tenants with several years left on their lease may want to extend their lease in consideration for concessions that may not be offered several years from now.

Lease Termination and Contraction Options. 

A lease termination or contraction option can be an excellent way to achieve lease flexibility. Landlords are not fond of these provisions, and they can be difficult to obtain. Most landlords will not even consider termination or contraction for a lease term less than seven years. In addition, these options are not free. At a minimum, the landlord will require payment of unamortized costs associated with tenant improvements, brokerage fees, and rent concessions. While not free, termination and contraction options offer significant flexibility.

Expansion Options.

As a company grows it may discover that it needs more space. Rather than facing the prospect of a move and then having to sublet existing space, a company may be able to build a series of expansion options into its lease. A right of the first offer will provide a “first look” at any space that opens up in the building. A right of first refusal requires the landlord to give the tenant the opportunity to rent a particular space in the building before offering it to a third party.  Companies that expect rapid growth should stick with larger multi-tenant properties as those types of properties offer more flexibility for expansion.

Renewal Option. 

A renewal option gives a tenant the legal right to extend a lease after the initial term has ended.   The terms of the renewal are outlined in the lease.   Renewal clauses define how far ahead of time it is necessary for the tenant to inform the landlord that it wishes to renew. Try to negotiate at least a 12-month notice period in order to have time to consider other options. Many renewals provide that they will be renewed at “fair market value”. The term fair market value must be defined. The goal is to have an objective third-party means of determining fair market value. Also, it is important that the fair market value takes into account the tenant improvement allowance and concessions the landlord would have to offer a new tenant.

Assignment and Subletting. 

Circumstances may arise in which it is necessary for a tenant to vacate their space early. In such instances, an assignment or sublease is a very beneficial provision to have. An assignment differs from a sublease in that an assignment transfers the original tenant’s rights and obligations under the original lease to a new tenant. The original tenant is completely off the hook.

With a sublease, the original tenant remains liable for lease payments in the event the subtenant defaults. Landlords prefer subleases because then they have two tenants liable for rent. The landlord will typically only grant automatic assignment rights to affiliates or successors of the original tenant. With either sublet or an assignment, the Landlord will want the right to approve the creditworthiness of the subtenant or assignee and the terms of the sublet or assignment. It is very important to negotiate that the landlord’s consent will not be unreasonably withheld.

If possible, avoid any requirement that the tenant offers the space first to the landlord. This is known as a “recapture provision”. If the landlord does have the right to recapture, try and limit the time frame for recapture. Also, try to negotiate the right to offer the space to other tenants in the building. Finally, it is crucial that the tenant have the ability to sublease its space for less rent than that being offered by the landlord.

With some careful advance planning, it is possible to negotiate a commercial real estate lease that takes into account projected future space needs while at the same time providing for maximum flexibility in terms of contraction and expansion.  Each tenant’s ability to successfully negotiate the most tenant-friendly terms will depend in part on the creditworthiness of the tenant, the amount of space leased, the cost of tenant improvements, and the term of the lease.  Tenants with great credit who take larger suites for longer periods of time with a small tenant improvement budget will obtain the best terms.

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 Get the Office Buildout You Bargained For https://mobiliticre.com/2020/10/05/how-to-get-the-office-buildout-you-bargained-for/ Mon, 05 Oct 2020 17:27:14 +0000 https://mobiliticre.com/?p=935 The build-out of your office space is one of the most important and expensive aspects of your lease. The following is a brief summary of the four different options to consider for your office buildout Leasing Space that is Already Built-out. For tenants leasing 5,000 feet or less, it usually makes sense to lease space […]

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]]> The build-out of your office space is one of the most important and expensive aspects of your lease. The following is a brief summary of the four different options to consider for your office buildoutHow to Get the Office Buildout You Bargained For

  1. Leasing Space that is Already Built-out. For tenants leasing 5,000 feet or less, it usually makes sense to lease space that has already been built out. This type of space would include a new space that the landlord has built out on a spec basis or second-generation space that was built out for a previous tenant. Depending on lease term and tenant credit, landlords will usually be amenable to making minor modifications to the space in order to make it suitable for tenant’s use.

Pro: If you are on a tight deadline, you will be able to move in quickly. You can save costs by using a previous tenant’s buildout with minor customization for your needs.

Con: If the space has not been designed for your needs you may incur unforeseen costs in modifying the space or be forced to live with space that is not a good fit.

  1. Landlord Designs and Builds to Suit Tenant’s Specific Needs. If you are leasing more than 5,000 feet, it probably makes sense to have your space custom-designed for your specific use. If you decide to have the landlord build out your space, there are two ways to move forward.

A ) Using the “Building-Standard Work Letter”. A “building-standard work letter” describes in detail the type of buildout the landlord is willing to build for you. The work letter should include a written description that indicates all of the specifics, including the amount of building-standard lights, doors, electrical outlets, linear sheet rock, etc. that the landlord is providing. The landlord should also show you building standard materials including the type of carpet, tile, paint colors, and materials to be used in kitchens, conference rooms, etc.

Pro: The free rent period will start after the space is completed, so construction delays and cost overruns will become the landlord’s problem not yours.

Con: The look and feel of your space will be largely determined by the landlord. See additional cons relating to turn-key buildouts described below paragraph C.

B ) Using the Building Work Letter with Modifications. An alternative to using the exact specifications in the building work letter is to make substitutions to the work letter in order to achieve a more unique look.

Pro: You have the benefit of the landlord assuming the construction risk and timing.

Con: It can be challenging to make sure everything is included in the building work letter, which might leave you responsible for excess costs. See additional cons relating to turn-key buildouts described below in paragraph C.

  1. Landlord Builds According to Tenant’s Plans. This type of buildout can offer the tenant the best of both worlds: a space completely customized to the tenant’s needs and design criteria with the landlord assuming the obligation to build out the space.

Pro: Typically, landlords have better purchasing power than tenants, because they often buy materials in bulk and have pre-existing relationships with contractors. Therefore, it may be less expensive for the landlord to build out space rather than for the tenant to do it. In addition, any cost overruns and delays are the landlord’s obligation not the tenant’s. Any free rent period will not begin to run until the space is delivered to the tenant.

Con: In order for the landlord to agree to the buildout, working drawings must be attached to the lease. Preparing the drawings takes time and money and it can delay lease negotiations. In addition, tenants may be at risk of paying for the drawings without knowing if they have a deal or not.

Each of the scenarios described so far involve “turn-key” buildouts where the landlord pays for and delivers space according to previously agreed specifications. A major problem with a turnkey buildout is that the landlord is going to add a significant amount to the estimate to cover contingent costs in order to ensure that the landlord does not end up paying more than the amount estimated. This contingency can amount to 25-30% of the entire bid! The more efficiently the landlord manages the buildout the more it can save. This can encourage the landlord to cut corners. Also, with a turnkey buildout, the tenant relinquishes control of the process. This can be alleviated somewhat by negotiating an extensive work letter detailing the materials and work to be done.

  1. Tenant Builds Out the Space Using its Own Project Team. With this alternative the tenant receives a “stated dollar amount” from the landlord and the Tenant uses that amount to cover architectural, engineering and buildout costs.

Pro: Tenant is able to custom-build its space. With a stated dollar contract, the tenant maintains control over both the quality and timing of the process.

Con: The tenant is responsible for all project delays, which may eat up any free rent concession. Tenant will be responsible for cost overruns and does not generally have the same purchasing power as the landlord which could add costs to the buildout. If the tenant chooses to take on the challenge of building out its own office space, the tenant must develop and adhere to a very specific project budget and schedule and must organize a team of architects, engineers and contractors.

How long will it take to build out the space? It takes approximately 12 to 16 weeks to build out 20,000 to 50,000 square feet of office space. You should plan for slightly less time for smaller space and slightly more time for larger spaces.

How Much Will it Cost to Build Out Office Space?

The following is chart shows average buildout costs for new and second generation, class A, B, and C spaces in the Tampa Bay commercial real estate market based on standard building finishes and higher end finishes. Keep in mind that costs vary from season to season based on various factors including shipping and fuel costs. In addition, costs can also be higher or lower in different urban or suburban markets.

AVERAGE BUILD OUT COSTS PER SQUARE FOOT

Finish Quality New Building Class A/B+ Class B-/C
Standard Blding. $45.00 $30.00 $20.00
Above Standard $60.00 $40.00 $25.00
High Finish $75.00 $50.00 $30.00

 

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, 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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]]> 11 Tips for a Successful Real Estate Tour https://mobiliticre.com/2020/09/22/11-tips-for-a-successful-real-estate-tour/ Tue, 22 Sep 2020 20:58:43 +0000 https://mobiliticre.com/?p=920 Touring commercial real estate takes time.  On a typical tour your team may view up to 8 properties.  To help you prepare for the tour, your commercial real estate broker should provide information on each property toured in advance of the tour.  Encourage each team member to view that information in advance if possible.  The […]

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]]> Touring commercial real estate takes time.  On a typical tour your team may view up to 8 properties.  To help you prepare for the tour, your commercial real estate broker should provide information on each property toured in advance of the tour.  Encourage each team member to view that information in advance if possible.  The following are some guidelines four ensuring that your tour is productive:

 

  1. Include Your Entire Team on the Tour. It is advisable to have all of your project team members present (and, if possible all decision makers). Without the feedback of all team members, you may become interested in spaces that ultimately will not work out.

 

  1. Be Prepared. Prepare your questions about the space(s) and research everything you can before physically touring the building. You should be clear on exactly which issues and factors in a space are priorities and which are negotiable.

 

  1. Be Neutral. Enthusiasm and excitement for the space can ruin any advantage you may have during negotiations. Asking questions regarding the space and its suitability for the company’s requirements are good but save the discussion about whether or not it is an ideal location until after you have left the building. You should however make it clear to the landlord or leasing agent that you are looking at a number of buildings and locations. Just don’t tell them which ones!

 

  1. Don’t rush the process. Take time at each individual space and take notes and pictures. It can be difficult to distinguish properties after the fact without good notes.

 

  1. Ask about the tenant mix. Review the building directory to determine if there are competitors that you do not want in your building or other undesirable tenants. Also make note of tenants that could be complimentary.

 

  1. Visit the bathrooms and ride the elevators.

 

  1. Check parking. Does there appear to be enough? Is ingress and egress a problem? You may want to return during rush hour.

 

  1. Evaluate Security. Ask about card key entry and whether or not there is security on site. Are there security cameras?

 

  1. Ask about Signage. Is exterior signage available? Find out what is included for free and what if any; expense will be incurred for exterior signage.

 

  1. Heating, Ventilation and Air Conditioning. Find out the building standard hours for HVAC. If you will need HVAC in addition to those hours, ask about charges for after-hours services.

 

  1. Covid 19 Related Precautions. Ask what precautions the landlord has taken to minimize the risks of Covid 19.  For example, has the landlord upgraded air flow in the building and installed ultraviolet filters?  Are there touchless options for moving through the building?  Are there enhanced cleaning protocols?

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, 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 Determine How Much Office Space You Really Need https://mobiliticre.com/2020/09/15/determine-office-space-need/ Tue, 15 Sep 2020 15:18:41 +0000 https://mobiliticre.com/?p=864 When you are considering an office move there are several steps you should take to ensure that the entire process is as smooth as possible.  In previous weeks we discussed the importance of reviewing key provisions in your existing commercial real estate lease and the need to establish a team, a timeline, and a budget.  […]

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]]> When you are considering an office move there are several steps you should take to ensure that the entire process is as smooth as possible.  In previous weeks we discussed the importance of reviewing key provisions in your existing commercial real estate lease and the need to establish a team, a timeline, and a budget.  Once you have completed those steps, you are ready to determine how much space you actually need.

  1. Poll Key Personnel

To determine how much space is necessary, begin by polling key personnel and the heads of various divisions 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.

  1. Controlling Rental Costs

There are essentially two ways to control rental cost:

  • Minimize the cost per square foot;
  • 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.

  1. 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

  1. Have a Furniture Dealer Lay Out The SpaceHow to Determine How Much Office Space You Really Need

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.

  1. 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.

  1. 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 interior wall to 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 a 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 a leased premises includes the tenant’s share of the building’s common areas such as lobbies and other non-rentable space such as mechanical areas, bathrooms and staircases.

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, 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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]]> Cost Saving Strategies to Reduce Rental Expenses https://mobiliticre.com/2020/04/29/cost-saving-strategies-to-reduce-rental-expenses/ Wed, 29 Apr 2020 16:52:17 +0000 https://mobiliticre.com/?p=760 Cost Saving Strategies to Reduce Rental Expenses – Market conditions for commercial real estate are currently in a state of flux.  While no one knows how severely Covid 19 will affect the market, two things are certain:  rental rates will probably decrease, and vacancies will increase.  Some tenants will undoubtedly downsize, move to less expensive […]

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]]> Cost Saving Strategies to Reduce Rental ExpensesCost Saving Strategies to Reduce Rental Expenses – Market conditions for commercial real estate are currently in a state of flux.  While no one knows how severely Covid 19 will affect the market, two things are certain:  rental rates will probably decrease, and vacancies will increase.  Some tenants will undoubtedly downsize, move to less expensive space or permanently close their doors.  All of this market uncertainty will cause landlords to work harder to retain creditworthy tenants.  All of these circumstances make it an excellent time for any tenant considering either a renewal or a renegotiation of an existing lease.

What is a lease renegotiation? 

A renegotiation of your lease terms and conditions can help you achieve more favorable terms now.  A lease renegotiation can take place at any point in the lease cycle.

What are some of the benefits of renegotiating my lease?

  • Reducing your contribution to a common area or triple net expenses.
  • Reducing cost through rent reduction.
  • Increase or decrease the size of your leased premises.
  • The reduction or elimination of security deposits.
  • Have your landlord contribute to or make capital/cosmetic improvements to your space.

What are some tips for renewing a lease?

Click the attached link for detailed tips to use when renewing.  These include

  • Begin the process at least 12 to 18 months prior to expiration.
  • Gather market data about your building and your submarket.
  • Create negotiating leverage by convincing your landlord you may move.
  • Do not share your intentions with anyone.
  • Do not negotiate without representation.

Why hire a commercial real estate broker?

  • A commercial real estate broker is familiar with all aspects of the commercial real estate market including rents paid by other tenants in your building and submarket and concessions currently being offered such as free rent and tenant improvements
  • When you are represented by a broker your landlord will perceive you as sophisticated and serious about moving elsewhere thereby creating negotiating leverage.
  • Our commission is paid by the landlord and factored into the quoted rental rate.  If you do not have your own broker, this portion of total commission fees will simply be paid to the landlord’s broker.  Take advantage of this free service!

Call or email today to discuss your options.

Pam Pester, President
Mobiliti CRE

813.300.2227

Pam@mobiliticre.com

 

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]]> Tips for Renegotiating Rent Due to COVID-19 https://mobiliticre.com/2020/04/06/tips-for-renegotiating-rent-due-to-covid-19/ Mon, 06 Apr 2020 14:34:51 +0000 https://mobiliticre.com/?p=721 6 Tips for Renegotiating Rent Due to COVID-19  – Given the unprecedented and almost total shutdown of businesses due to COVID-19, many tenants will be unable to make their rental payments in the next several months.  Here in Tampa Bay, we are seeing a willingness on the part of some landlords to negotiate short term […]

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]]> 6 Tips for Renegotiating Rent Due to COVID-19  – Given the unprecedented and almost total shutdown of businesses due to COVID-19, many tenants will be unable to make their rental payments in the next several months.  Here in Tampa Bay, we are seeing a willingness on the part of some landlords to negotiate short term reductions and in some cases, abatement of rent.  Much of the landlord’s ability to negotiate will depend on the landlord’s own debt burden if any and its ability to renegotiate with its lender.  Publix, the largest employee-owned company in the US owns many of its shopping centers outright.  Publix recently announced that it will offer two months of rent abatement to tenants in its shopping centers who have closed due to COVID-19.  Most commercial landlords do not own their properties outright and they will thus be limited by existing loan covenants and their own lender’s willingness to negotiate.

Click here for Various Relief Programs Available to Small Businesses

Our advice to all tenants is to continue to pay your rent if you can.  If you can’t pay your rent (and even if you can pay your rent) you should become familiar with all of the federal, state and local loan and grant programs that are available to small businesses.   The Cares Act provides, among other things, forgivable loans under the Paycheck Protection Program.  Some of these funds can be used to pay rent.  Prior to approaching your landlord, you should familiarize yourself with these programs to ensure that your negotiations with the landlord don’t jeopardize any loan forgiveness you may receive through government programs.  Once you have familiarized yourself with the governmental requirements for receiving funding and determined either that you are not eligible or that short term negotiations with the landlord will not adversely affect your rights to governmental funding, try approaching your landlord using the following tips:Tips for Renegotiating Rent Due to COVID-19

  • Start early and be completely transparent with the landlord. Don’t wait until you are behind on your rent to reach out.  Have data prepared to demonstrate how COVID-19 has negatively impacted your business.
  • Messaging is key. Decide who should contact the landlord.  You may have more success contacting the landlord directly as opposed to having an attorney reach out for you.
  • Take into account the type of landlord you are dealing with. Does the landlord have a mortgage on the property?  How financially secure is the landlord?  Are you dealing with a small local owner or a larger sophisticated owner?  This will determine in part how you approach them.
  • Start with a short-term request of two to three months of assistance. There is so much economic uncertainty right now that the landlord is unlikely to agree to anything long term.  You can always come back and ask for additional assistance as the situation unfolds.
  • Try to negotiate a rent abatement (suspension of rent entirely) or a rent reduction as opposed to a rent deferral that will have to be repaid later. If the best you can get is a deferral, try to postpone repayment by adding an additional term to the end of the lease or by amortizing payments over the remainder of the lease.
  • See if your security deposit can be applied to pay rent now. The security deposit could be replenished later when business recovers.

In addition to the above, don’t forget to reach out to your insurance agent to see if you are entitled to any type of insurance coverage.  You may also want to consult your attorney to see if any provisions in the lease can be used as leverage in negotiating with the landlord.

Feel free to reach out to Mobiliti CRE with any questions you may have regarding your lease.  Call or text 813-300-2227 or email pam@mobiliticre.com

No Cost Tenant Representation

Additional Resources:

What’s the Difference Between an Assignment and a Sublease?

Should You Sign a Short-Term or Long-Term Lease in Today’s Market?

Tips for Renegotiating Rent Due to COVID-19

 

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]]> Reduction in Florida Sales Tax Rate on Commercial Lease Payments https://mobiliticre.com/2020/01/06/florida-reduces-tax-rate-on-commercial-lease-payments/ Mon, 06 Jan 2020 19:55:21 +0000 https://mobiliticre.com/?p=682 Effective January 1, 2020, the State of Florida’s sales tax rate on commercial real property lease payments (including base rent and additional rent) was reduced from 5.7% to 5.5% for payments received for occupancy periods beginning on or after January 1, 2020. Real property leases are taxed on base rent as well as other payments tenants must make as a condition of their occupancy. This includes […]

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]]> Effective January 1, 2020, the State of Florida’s sales tax rate on commercial real property lease payments (including base rent and additional rent) was reduced from 5.7% to 5.5% for payments received for occupancy periods beginning on or after January 1, 2020.

Real property leases are taxed on base rent as well as other payments tenants must make as a condition of their occupancy. This includes common-area maintenance fees, property taxes and utilities payable by the tenant as outlined in the lease.

In addition to the state tax, the property owner is required to collect from tenants any county-imposed local-option sales surtax on the total rent charged.  In Hillsborough County, the surtax is 2.5% bringing the total sales tax to 8%.  In Pinellas, Polk, Lake, Manatee, Sarasota and Pasco Counties the surtax is 1%, bringing the total sales tax to 6.5%.

These sales taxes are not typically included in the rental rates quoted by landlords.  As the sales tax is not insignificant, it’s very important for commercial tenants to include sales taxes when preparing annual budgets.

Mobiliti CRE specializes in representing tenants with expansions, contractions, renewals, and moves.  We would be happy to assist you with your commercial real estate requirements.  Contact us today at 813-300-2227 or via email at pam@mobiliticre.com.

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]]> 2019 Tampa Bay Commercial Real Estate Rental Rates and Increases https://mobiliticre.com/2019/10/07/tampa-bay-cre-rental-rates-2019/ Mon, 07 Oct 2019 20:22:13 +0000 https://mobiliticre.com/?p=666 Commercial Real Estate (CRE) Rental Rates and Percentage Rent Increases In Popular Office Submarkets in the Tampa Bay Area. Submarket Q3 2014 Rental Rate Q3 2019 Rental Rate Percentage Rate West Shore $27.23 $37.41 27% Downtown Tampa $25.52 $34.50 25% Downtown St. Pete $23.56 $31.26 26% Gateway $21.24 $28.94 27% Source – CoStar Group – […]

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]]> Commercial Real Estate (CRE)

Rental Rates and Percentage Rent Increases

In Popular Office Submarkets in the Tampa Bay Area.

Submarket Q3 2014 Rental Rate Q3 2019 Rental Rate Percentage Rate
West Shore $27.23 $37.41 27%
Downtown Tampa $25.52 $34.50 25%
Downtown St. Pete $23.56 $31.26 26%
Gateway $21.24 $28.94 27%

Source – CoStar Group – CoStar is the premier provider of information, analytics and marketing services to the commercial real estate industry.

At Mobiliti CRE we routinely save our commercial real estate clients time and money by locating viable options and negotiating the best possible terms whether it involves a new lease or a renewal. Don’t wait until you receive a lease renewal offer from your landlord to consider your options.

Contact Mobiliti CRE today for a free lease review. Call Pam Pester at (813) 300-2227 or email pam@mobiliticre.com

 

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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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