Make sure you have allocated the time to do all of the necessary research when it comes to considering a business location move. Many business operators do not leave enough time to do just that. As a result, they make snap decisions that end up costing themselves both time and money.
I often see cases where quick decisions were made with the end result being the perfect storm for future failure.  In other words, the business operator did not know what he did not know.  Many times they missed important options that could have easily been obtained so that their future would have been more secure. 

Knowing these options, asking for them and incorporating them into your next transaction will give you the piece of mind needed to navigate these turbulent economic conditions.   I hope you enjoy this edition of the Tenant Buyer Bottom Line Secrets!

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Are You Wasting Your Time?

On March 8, 2010, in Tenant Tips, by Rob

 Take a moment to calculate your total annual salary.

Take that number and divide it by 50 working weeks in a year, next divide that number by 40 hours per work week. This figure is what you are worth per working hour.

Time- $_______ (your yearly salary here) / 50 working weeks/ 40 working hours per week = $ _______ THE VALUE OF YOUR TIME

Don’t you think that your time is better spent running your business and not doing something that can easily be out-sourced ???

Don’t forget that in most cases real estate brokers who represent tenants are paid out of commission splits with the property owners leasing agents, that means it costs you nothing! That is the portion of commission you let the listing broker keep if you do your own transaction without professional representation.

On the tenant-buy side of the commercial property equation, it makes sense to find someone, who can help you with respect to making these important business decisions.  My advise is to find someone!

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Q. How much time should I allow to analyze renewing my lease or relocation decision?
A. As in most areas of business, the more time you leave yourself, the better decision you stand to make. If the tenant is relocating, this decision will result in the tenant needing more time to get the transaction and the desired result. Depending on the size of facility and the inventory of space in your market place, starting 8-12 mos. before is not uncommon. Renewal decisions should also begin well before the lease term end. In many cases, there is a huge benefit for the property owner to have written commitment for financial purposes. 4-6 mos. early can certainly be wise.

Q How can a broker save me money if I am going to simply renew my lease?
A. The broker should provide the comparable market conditions which result from a complete market study, this will give you the ammunition you need to make sure that your renewal lease is not abusive on the rate. Knowing what other concessions are being offered in the market place helps you get all that you are entitled in the renewal.

Q. What other areas of cost savings exist, other than the lease rate per square foot?
A. Tenant improvement allowances, escalation methods and abatements are key areas available for dollar savings.
Large companies with multiple leases can benefit from real estate consulting services like Workplace Consulting, Information Management, and Program Management. These services can be use to trend occupancy costs downward substantially. Your broker should be able to help you negotiate these items during the relocation or renewal process.

Q. Should I lease or buy?
A. The answer to this question should be answered only after careful consideration of your firms long term goals. In areas where real estate is appreciating (like Charlotte, NC) purchasing can be a very profitable approach. Consultation from a real estate broker, financial planners (CPA’s) and bankers can shed light on all of the key areas to consider before making this decision. The level of active involvement you desire with the investment should be carefully considered.

Q. What if I am short on the down payment needed to make a purchase?
A. There are several great loan programs available today. These programs coupled with SBA loans, can get small business operators into properties from 0-10% down! Many developers and investors will partner with businesses who are able to commit to lease-purchase option or land trust conveyance. Clearly, the nature of your real estate needs will dictate exactly how the deal could be structured. See your broker for details.

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