When you are looking at a number of potential locations, it is not unusual to become  preoccupied with data comparison: square footage, load factors (don’t know what that is?  You need an advocate who does!), base rent, concessions, operating expenses, and on and on.  Sometimes the distillation of this data will point you to a preferred site.  But there is another often underestimated factor to be considered: the landlord.

Evaluating the landlord is more art than science.   Consider that a “Class A” office building is often defined by size and on-site staff.  But it’s the landlord’s attitude toward the building that puts the “Class” in Class A.  Does the landlord have a reputation for seeing tenants as their most precious commodity or as a nuisance?  This attitude doesn’t appear on the page of their counteroffer or even on their website.  But a seasoned broker knows or can see the telltale signs in the management of the property.

Sometimes the magic is in matching the agendas of the two parties.  I recently ended a one year search for the perfect building for an aerospace manufacturing client.  The building I found was not at all remarkable from the outside but a new owner had just taken over the building and in an effort to restore the building’s value and curb appeal, had his checkbook out and was undertaking property-wide upgrades.  I caught him at the perfect moment.  I introduced the tenant and suggested he redirect his capital investment to tailor the building for their needs.  Done deal and our search was over!  It helped tremendously that this landlord takes great pride in their investments and holds them for a long time.

I am presently working with a unique, niche bakery searching for the perfect location in downtown Los Angeles.  We looked at several properties.  One stood out in both of our minds.  The reason?  In the tenant’s words (reflecting on the landlord), “He is cool, and he gets it.”  That may sound esoteric but it is absolutely on point.  So much more can be accomplished with a landlord who is truly enthusiastic about the tenant’s business, especially with retail real estate.

Don’t miss the forest for the trees – choosing the right landlord is crucial! 

– Aaron W.

Almost every person I spoke to about entering the world of commercial real estate brokerage said the same things.  You’re going to eat shit for at least a year…don’t expect to make any money for at least the first 9 months… you must be a certain type of person to succeed in brokerage.  Then I accepted a job as a Tenant Rep Broker and with it came the clichés.  You eat what you kill…a deal is never closed until ink hits paper…it’s a numbers game…don’t count your chickens before they hatch.  If you are like me, you tend to jump right into situations and prefer to learn by being thrown into the fire.  You also probably thought you would be an exception to the rule or that the clichés were just a scare tactic.  If you are not like me, I will save you the wait.  It is all true.

The sooner you realize this the better.  Because whether you accept it or not, you are going to learn, your first week on the job, just how unforgiving this business can be and it is going to make your first deal falling through sting that much more.  Which is exactly why one of the most important clichés to live by in this business is, it’s never over until it’s over.  I learned the hard way when I thought that my first client ever was a done deal.  I was already doing the math of how much money I would make and fantasizing about what I would do with the big influx of cash coming my way.  I left the office thinking we were about to enter leases and everything looked as if the deal would be closed within a week or two.  I slept well that night, feeling victorious.  But you know what happened next?  I woke up to an email informing me that the deal was dead. Talk about a punch in the gut. Maybe I will get into the details of this story, and the many reasons a deal can fall through in a future blog post; then again, maybe I won’t.  Regardless, the moral of the story is, don’t count your chickens before they hatch.

Of course, there will always be exceptions to the rule and people will always get good bounces; however, even the broker with the best luck is going to fail.  It’s just the nature of the business.  Commercial real estate for a new broker truly is a numbers game. If you want to succeed you better be ready to fail. Repeatedly. Baseball is considered of sport of failure.  A player that gets only 3 hits out of every 10 at bats is considered a hall of famer.  Yet, inn commercial real estate, a success rate of 1 out of every 10 would make you a hall of famer.  If you aren’t willing to fail, you probably are not in the right business.  So, don’t stay down when you fall, get back on the horse and learn from your mistakes!

One of the hardest parts of being a broker is being in charge of your own schedule and being a self-starter.  If you don’t start hungry, and stay hungry, you will end up spending a lot of time making very little money.  However, if you put in the time and pay your dues, yeah, you’ll eat shit for a while, but there might be a bucket of gold at the end of the rainbow.  (I think. Time will tell).  But just because you work hard does not mean it is going to work out for you.  As a real estate broker, you’re a dime a dozen and every other broker is out to get the same clients you are. So, pick up the phone and start dialing.  Get out and network.  Always be looking for new ways to build your book of business.  And BE PERSISTENT.  What doesn’t kill you actually makes you stronger.  So, the next time you want to roll your eyes at an industry cliché, remember that you eat what you kill are words to live by in this industry.  If you do not live by those words, good luck.

P.S. this is my first ever blog post.  It probably sucks. Feel free to tell me so.  I think next time I will tell you guys about my experience with cold calling.

– The Inexperienced Broker.

If you are a business owner or a CEO and have never seen a commercial office lease you may not quite understand the importance of knowing exactly what the terminology means before you sign on the dotted line. After attempting to read through a document that is often fifty or more pages long it is important to be certain that you are getting a fair and reasonable deal as a tenant. If you haven’t acquainted yourself with these important terms, you may be setting yourself for some huge headaches down the road. Let’s review a few of the most important terms and clauses of a commercial lease you should clearly understand.

Full Service Gross, Modified Gross and NNN (triple net) These are the three most common types of leases. As a tenant, you do not have the ability to choose which type you prefer, this depends on the building and the lease type the landlord has chosen for the building. Depending on your business and how you use your space, some lease types are more advantageous than others.

Common Area Maintenance (CAM) / Operating Expenses These are fee’s that are in addition to your rent. Take the time to read through what exactly these charges include, as to not be surprised when you see additional charges added to your base rent. Does your lease type include CAM’s? Being surprised you owe more than what you understood you would when you signed your lease could leave a bad impression with your landlord when you are scrambling to come up with the extra cash.

Rentable vs. Usable Square Feet Are you aware that there is a difference between the actual square footage of the space you lease and the square footage you are being charged when you pay rent (rentable square feet)? Welp, there is and it’s important to keep in mind through the lease process as to not affect your bottom line.

Base Years and Escalations Not all lease types include a base year. Typically, full service gross (FSG) leases and modified gross (MG) will include one. Your base year will affect your operating costs. Knowing if and how you can negotiate your base year can save your business money in the first several months of the lease term. If the operating expenses increase after your base year, you will need to pay the difference between your base year and any increase in operating costs.

Sublease options It is very common in any lease document to have a sublease clause. Your landlord will need to approve any future sublessee’s that you decide to either share your space with or lease to. Make sure you know the in’s and outs of how this process works with your Landlord and how it’s stipulated in your lease.

Hold Over Rent Some leases include this thing called a hold over clause. Doesn’t sound too scary but if you fail to move out at the end of your term, you will automatically roll into hold over which means you will be responsible to pay up to 125 to 200 percent of your currently monthly rate!

So the above mentioned are just a handful of the terms you will encounter after receiving a lease from the landlord. Knowing if terms are negotiable and or fair as a tenant is where engaging a tenant representation broker will become invaluable. Ask yourself if you want to spend countless hours studying, learning and risking losing money on your lease transaction? Ask us how we can guide you through understanding all the gibberish and assuring that you get the best deal possible either now or the next time you need to sign an office lease. We are happy to assist in any capacity.

In the world of commercial real estate, a tenant representation broker is the professional whose sole clients are office tenants in need of finding, re-locating or re-negotiating their office lease. This is the guy (or gal), who decision makers often times question the value that this professional could potentially provide to their business. First of all, what is a tenant rep broker? Why do I need a tenant rep if I can have my assistant search online for my new space by simply googling “office space” or by driving by and calling the “for lease” signs on the side of a building? Why should I use a tenant rep to negotiate my lease if my landlord, their broker and I have already discussed renewing my current lease? All these seem like pretty reasonable questions and what needs to be done sounds pretty simple, right?

Finding and leasing commercial office space and securing a dream office is much easier said than done and savvy and experienced tenants generally tend to agree, especially if their first go-around was without a tenant rep. There is a lot of money involved when signing a long-term lease and a whole lot more risk if you don’t know what you’re doing. The office leasing process is much more complex and much less straight forward than you’d think especially when the transactions are long term decisions. Below is a list, to name a few, of the things you’ll need to consider if you want to go it alone:

– Locating spaces in the right market that meet your requirement within your budget

– Market rates and asking rates

– Term length and pros/cons to signing a long-term lease

– Rentable vs. usable square footage & how much space you really need

– Rental abatement

– Parking costs & availability

– Early termination

– Load factor

– Base year

– Renewal option

– Right of first refusal

– Build to suit

– Triple Nets (NNN) and CAM charges

– Tenant improvement allowances

– Moving allowance

– Security deposits

Feeling overwhelmed yet? Wait until you see a fifty page lease! Not only does learning and understanding what all these terms mean and how they may affect your business take a substantial amount of time and energy but one small phrase or word over looked could cost you big time in the long run.  If you think you’re saving money by not engaging a broker to be your advocate, think again. Your landlord has a representative, shouldn’t you? Many tenants also don’t know that the landlord pays the tenant representative’s broker fee which means our services are free to you.

Don’t let your office leasing experience turn into a nightmare for you and your business. If you feeling confused, overwhelmed and feel like you’re struggling to make a decision regarding your current or future office space lease, reach out to any one of our tenant reps at TTG for a free consultation and some sound advice!

-Belen C.

If you’re considering leasing office space there are many factors that Tenants need to think about throughout the entire process. Everywhere from location, one of the most important decisions (so pretty much where you want to go to work every day), to evaluating your company financials to see how much cash you will need up front for securitization before signing those thickly stapled packets of paperwork, more commonly referred to as your Standard Office Lease.

A common occurrence is that Tenants, especially younger and typically start-up businesses, are required to provide an increased security deposit, generally because the Landlord understands the risk and implications that may come with leasing to a company with a short operating history and without reasonable time to profit. By contrast, for older more established businesses with a strong financial standing the Landlord may only require the standard one-month security whereas those with poor financial history or a new start-up may have to provide up to 6-9 months of a security deposit to assist the Landlord in covering their initial out of pocket costs.

What most Tenants do not know is that this is something a sophisticated Landlord in today’s market may be willing to negotiate with you. This is where a savvy tenant rep broker would definitely come in handy. Since the collection of a large up-front security deposit usually kills a deal for most Tenants, a couple creative negotiation strategies we have used (as a way for most start-ups to eventually sign a long term lease) is through the use of a Letter of Credit or Personal Guarantee. With an increased security deposit there are also ways to negotiate to minimize the hefty lump by reducing the total security throughout the Lease term by applying it as a credit towards rent. Minimizing security deposits are just one of the many obstacles Tenants will have to tackle with their prospective Landlord, why not make sure you have an experienced tenant representation broker on your team to get you to the finish line!

-Belen C.

Many of us know and understand that company image and culture is projected in many different ways. From branding and marketing materials to where you house your business. Many Tenants, be they retail, office, or industrial in nature, choose buildings and locations based on their “curb appeal”.  While there is no discounting the way a building looks from the street, experienced and knowledgeable real estate brokers know that what you see isn’t always what you get.  Sometimes poor brokers and naïve Tenants overlook the fact that there are two distinct audiences to please simultaneously: the way they’re portrayed in the outside world, to their clients and the public at large and what the company portrays to their employees and vice versa.

On the outside is the architecture, the building skin of granite or glass, the expansive lobby and the corporate identity (not necessarily theirs) on the top of the building. These factors may influence outsiders.  Have you asked yourself and thought about what is really important to your valuable employees in regards to their workplace?  Think location, ease of parking, the speed of the elevators, the smell of the bathrooms, the design of the suite, and the amenities in the building and the neighborhood. Employee productivity and satisfaction may fall into the hands of your physical office space, for example, like the basics  – when it is too hot or too cold or when there is not an adequate common area space for breaks and lunch time.

Next time you think about moving or signing a new lease be sure to consider all the ways in which a building and office space might really be impacting your business operations and the image it portrays to both the outsiders and most importantly those inside your office space. It might surprise you to learn that these are all things a good real estate broker can identify and by working together you can avoid and resolve them before you sign your lease.

– Aaron W.

The Tenant Group is looking to add to our squad.  If you’re looking to be your own CEO in a fun and creative environment while building quality relationships you should look no further. Let’s grab a drink and start a conversation! Our philosophy at The Tenant Group is “Work Together, Work Smarter.”  Our company culture reflects that of the new start-up style businesses ranging from team running days at lunch to flip-flops and shorts at the office.  That being said, providing the best quality service and proving ourselves the best strategic partner for our clients is our ultimate goal. To really succeed in the world of commercial real estate tenant representation, a new squad member should have a high energy level and a hunger to cultivate their own business. Call us, tweet us, email us…or whatever floats your boat .

Phone: 424.652.6313 ~ Twitter handle: @TheTenant_Group ~ Email: [email protected]

Client:  I need to find my first or next office space in the next 4-6 weeks.  Is that enough time to find an office that works for me and to secure a lease?

Tenant Rep Broker:  Yes, lets find you some spec suites that are ready for you to move in!

This conversation happens many times as tenants don’t always find themselves in the most ideal circumstances when it comes to their office leasing needs.  Spec suites are great for many reasons but, maybe most importantly, when you need to get into an office space immediately and you don’t have the time to wait for construction and a build out.  “Spec” simply means a Landlord has already spent the time and money building out a turn-key office in hopes that they will find a tenant looking to move in to the space “as-is.”  Many companies love this solution because they do not have the luxury to wait three to six months for a space to be built out and to be ready for occupancy.  Recently, I had a situation where a client had begun to expand their business quite rapidly in Los Angeles, and they needed an additional 2,000 square foot office for their sales team within a speedy two-week window.  I was able to find them a ready to go spec suite within a couple days of and by the end of our first week search we had a lease in play.

Another benefit to a tenant when thinking about leasing a spec suite office is that the security deposit amount required by the landlord will generally be lesser than if you were to lease another (not ready to move in space) in the same building. More than likely, if a tenant were to chose another available space in the building the Landlord would have to spend a great deal more of their time and money in order to tailor the condition of the space for occupancy (which could trigger a more onerous security deposit) which is also to be based off of the strength of the tenants financials.

So, the next time you find yourself in a time crunch when looking for new office for your business don’t go it alone, ask your tenant rep broker to look for available spec suites that meet your requirement. It is a simplified solution that will not interrupt your company’s business as usual.  No down time.  No hassle.  No brainer.  To learn more about how The Tenant Group team can help you find your new space call us up or reach out to us via email at [email protected] or be social with us on Twitter or Instagram! See you in your new spec suite office!

– Peter B.

Maybe it’s time during your current lease when you’ve got a little extra room in your office and are looking to sublease a portion to offset some costs OR maybe it’s just time to sublease your whole space and get your entire office leased to another company. Which ever it may be for you, either process can be a bit confusing and even costly if you don’t get it right the first time around. Although office subleasing is fairly common and is a very typical business practice in today’s office market, there are advantages and a couple drawbacks to think about before signing over your space. Here are a few tips to help you through.

• Read the terms of your lease – Not all Landlords will allow you to sublease all or even a portion of your current space. While reviewing, be sure to note whether the net profits you receive from the Sublessee are split 50/50 with your Landlord. If your lease states, you have the right to sublease, knowing if you’ll be profiting or not can help you decide whether it makes financial sense to go ahead with finding a Sublessee. Also, be ready for your Landlord’s one-time fee to consent on your sublease which typically ranges from $500-$2,000 to cover any legal fee’s they’ll acquire.

• Hire a pro – Consider using a Commercial Real Estate broker, preferably a tenant representation broker, to help market and lease your space. They will charge a fee for their service but they have marketing capabilities that would be very costly for you to obtain without them. More importantly, they have a vast network and tons of connections with other tenants and brokers that will help get your space leased up faster.

• Play hard to get, don’t be picky – Being picky when it comes to choosing your Sublessee is part of your responsibility as the new Landlord of your space. While you may need the rent money you do not want to get stuck in a situation where the company you’re considering has bad credit and where you’re at high risk. Make sure they’re reputable. If you’re subleasing a portion of your office space make sure the Sublessee will have a positive impact on your brand and current company culture.

• Speak with your Landlord – Even though for most Landlords letting a tenant out of a lease is highly unlikely and sometimes even entirely out of the question, you may be pleasantly surprised to have caught your Landlord on a good day where they approve relieving you of your lease obligation. We’ll keep our fingers crossed for you.

These are just a few tips to consider while you’re thinking about subleasing your office space. On your next go around ensure the sublease clause in your lease is negotiated in your favor so if the time ever does come, you come out winning more and losing little in the agreement. Since running your business is your job let us do ours and help make this time consuming and lengthy process of subleasing easier for you. Sometimes having a savvy tenant rep negotiator is your best bet!

–  Belen C.