Tenant Improvements: Now you see them, now you don’t. If improvements are to be made to the leased premises prior to the tenant’s occupancy, the tenant must understand the economic impact of such improvements and know what it will get. Understand that getting such improvements is increasingly difficult in today’s economy given that landlords cannot secure tenant improvement financing like they used to. Here are some important tilps:

Make certain that the obligation to pay rent and other charges do not begin until the tenant improvements are complete.

Determine whether the landlord will be designing and constructing the tenant improvements at its sole cost (a “turnkey” arrangement) or whether the landlord will be giving the tenant an allowance, with either the tenant or landlord designing and constructing the improvements (an “allowance” arrangement).

Before entering into the lease, in an allowance arrangement, the tenant should have final space plans and estimates for the work so that the tenant is not exposed for the cost of improvements in excess of the landlord’s allowance or, at the very least, will know how much it will have to pay.

In both turnkey and allowance arrangements, the tenant must be certain to work with a competent broker and space planner to make certain that the space will be built out to satisfy the tenant’s needs

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Where the landlord does the design work, reserve the right to look at, review and approve all designs and materials utilized, and the right to make changes up through the design stage of the tenant improvement design documents.

Additionally, in an allowance arrangement, make sure that the allowance will not be used up for base building work, such as bathrooms located in common areas, asbestos abatement, or sprinkler systems.

Agreement should be made as to the disposition of the landlord allowance if the actual tenant improvements cost less than the allowance. The landlord would like to keep the unused portion of the allowance, but the tenant should attempt to get the landlord to apply the allowance to the costs of other work that is the responsibility of the tenant under the lease or work letter, pay it to the tenant, off-set it against future rent, or allow the tenant to use some portion of it.

Negotiate remedies for landlord-caused delay and carefully define and limit the consequences of tenant-caused delay.

If you are not sure what you are doing, get help! See your attorney or tenant rep broker!

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Eight Easy Steps To Moving

On January 31, 2010, in Tenant Tips, by Rob

Unfortunately The process of moving your company began the moment the decision was made to move and will not be complete until every invoice is paid, every scratch is mended, and everybody is settled into your new facility.

I suggest that the move be broken down into eight easy to manage phases:

1. Inventorying all items to be moved, refurbished or sold.

2. Developing an action plan for the move.

3. Preparing RFP’s and obtaining estimates from the movers and firm bids from other vendors.

4. Selecting a moving company and other vendors to be used in the move.

5. Educating your employees about the move.

6. Packing and preparing your furniture, equipment and contents for the move.

7. Supervising the actual move.

8. Post move follow up.

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Find out the costly mistakes do avoid when starting the commercial relocation process as well as how the commercial real estate markets have faired given the current economy.

It is all included in this months issue of the Tenant Buyer’s Bottom Line Secrets- January 2010 Newsletter Edition

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 Integra Realty Resources has released their preeminent 2010 real estate economic forecast publication, IRR-Viewpoint. This marks the 20th year our publication has been providing information pertaining to economic growth, capitalization rates, discount rates, and market-by-market value trends for major investment grade real estate.

Highlights of this year’s study include:
-  Extensive data about the local and national market conditions for multifamily, office, retail, and industrial property types.

-  Special sections on lodging, gaming, seniors housing, green buildings, and self storage sectors.

-  A summary of the Mexican and Canadian real estate markets.
Overview of demographic and economic trends and how they affect the real estate market.

This year’s Viewpoint was compiled by our real estate experts from 59 offices across the country. With over 850 analysts and staff nationwide, 160 of whom hold MAI designations, Integra offers local expertise – nationally to provide you with invaluable insights in the future real estate market. Click Here to get your copy.

Please remember this is CORPORATE INVESTMENT grade real estate meaning the study was based upon large commercial transactions. It can be a useful indicator for smaller property owners.

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Costly Mistakes To Avoid When Moving

On January 11, 2010, in Tenant Tips, by Rob

 

Unfortunately many people find out far too late that there is more to moving a company than just calling a mover and setting a date. They are overwhelmed with the details and steps required. According to a survey of 231 law firms relocating to new office space, the biggest problems they had to deal with were:

Insufficient planning 52%

Selecting vendors 37% 

Cooperation, teamwork and morale 29% 

Disposal of obsolete files 21% 

Forgetting important tasks 19%

Keeping within the budget and schedule 11% 

Matching files to offices 10%

A Relocation Management study revealed almost two-thirds of the people responsible for the relocation of their company were either fired or demoted after the move.  Other took time off for stress related ailments.

So how can these mistakes be avoided?  They can be avoided by setting up a process and first asking the following:

Who is in charge? From the start decide who is responsible for the move. Even if you have a move committee, someone will always have to make the final decision.

Start planning early- Henry Ford said, Before everything else, getting ready is the secret of success.

Get the word out- The company rumor mill can impair morale.  People in general, fear change and uncertainty. Tell people what is going on, and how it will impact them. You will be surprised at what they will tolerate and how much they will help out if informed.

Focus on the details- If you do not know what the details may be, then find out.

Allow enough time-  Take in to account Murphys Law and things always take longer than planned. Make sure you have cushion in your schedule for delays.

Use checklists- A small company must consider a hundred or more activities; a large company upwards of a thousand.  There are just too many things to remember. Use checklists to help assign, organize and track your progress.

Finally, a good tenant broker or buyers broker should be able to assist you in getting resources together for the move including the checklists!

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