In over a decade of leasing and owning various types of commercial real estate, I have developed the belief that brokers and landlords should focus on two major themes in order to create a professional and effective leasing environment to welcome prospective tenants.
· Mutual Understanding- Accepting that the devil is in the details, so clear communication of conditions to an agreement is paramount
· Urgency- Acknowledging that unexpected delays create anxiety, so answers and solutions need to be available quickly
Start with a 360 degree assessment of the situation and define the ultimate goal. This will allow for anticipation and preparation of the pre-leasing steps each stakeholder should consider items including but not limited to;
· Current Market Conditions – Brokerage Commissions, Moving Allowance, TI Packages, Building Standard Finishes, etc.
· Current Finish Level – Lighting, Ceiling Configuration, Flooring, Structural, Electrical, Telecom, etc.
· Mechanicals – Warranties, Maintenance Obligations, Electrical, HVAC, etc.
· Current Lease Obligations – Expansion, Termination, or Purchase Options, Capital Requirements, etc.
· Current Financial Obligations – Loan Covenants, Financing Timetables, Lease Approval Processes, etc.
Assessing the conditions and clearly communicating the ultimate goals ahead of time will aid in addressing situations such as…
· Structuring the lease that prioritizes identified finical investments and expected returns needed to service a mortgage, cover operating expenses, or achieve a certain sale price
· Creating a working environment where an interior designers and general contractors can merge design and function by crafting their expectations around a mutual understanding of necessary physical limits
· Operational issues that are likely to arise after occupancy such as parking plans, power consumption, data capacity, delivery schedules and routine maintenance, so all stakeholders can plan around each issue without disruption
Eventually nearly all issues can be resolved, but the later issues are dealt with then the more cost and frustrations are, when pro-active thought could have addressed the issues earlier. All stakeholders should sign off on, and verify all brochures, plans, budgets, or other documents that will be included in the lease as exhibits, because it is far easier to simply start down the correct path.
Long Term Success
At the end of the day, leasing is the art of negotiation supported by the science of market research, so those who anticipate and prepare for the potential considerations will be able to answer the questions with urgency and clarity, and build trust through mutual understanding. That trust will benefit all stakeholders involved, hopefully by reaching the first lease renewal without any major turbulence.
I enjoy discussing and working through various situations, so I encourage anyone looking to discuss an issue to contact me at email@example.com.