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.