If your lease is silent on the subject, most States provide that a landlord can charge double rent during a holdover period. Many commercial leases address this issue and specify some increased rent penalty from between 125% (if you negotiated it up front) to 200%. In addition, since rent is paid monthly, you are obligated to pay for the entire month
Your company has multiple leases for office or industrial space. You’re represented by a Big 5 Landlord Rep firm, and it’s not working out so well. You’re under pressure to improve it, along with a hundred other things that need improved. So you plan to create an RFP for RE services. I get it.
I took this photo of Mick Jagger when I was a photojournalism major at the University of South Florida. It made the cover of a small time music magazine, and I had visions of eventually getting my work on the cover of Rolling Stone. Just like the song. Around the same time, I took an […]
Let’s consider the corporate headquarters of a fast growth service business. Suppose that 1) they have a preference for keeping everyone together in one contiguous space, 2) they desire to strategically minimize cost and risk, and 3) growth rate is a variable based on many factors. What is the smart way to scale facilities?
If you have a growing service business, you probably used to shop for office space by comparing rental rates. The lowest cost space, of comparable class alternatives, was often the best choice. That’s no longer the case. The cost of labor, including attracting, hiring, compensating and retaining staff is typically between 8 and 12 times […]
With the exponential rise in online sales over the past few years, and an expected additional increase of 54% by 2020 according to Forrester, retailers as a category are hurting. A June 2017 article in the L.A. Times predicted that up to 25% of U.S. malls will close in the next five years. It is not that […]
On many CFO and financial executive’s Urgent Issues or Focus List, real estate often doesn’t make the top ten. Why? I think in part it is because the impact of a real estate decision is spread over many categories of the Profit & Loss Statement. (I won’t get into FASB ASC 842 even though it […]
Acquisitions often focus on just a handful of items: synergy, talent, perhaps geographic coverage and/or technology, and revenue of course. The investment bankers and attorneys that orchestrate the deal generally do a great job of ferreting out the business issues that need resolved. Except for the real estate.
When choosing professional services, there exists an old adage that the largest providers are the safe bets. “Nobody ever got fired for hiring IBM” was the well known saying implying that a large company offered at least the reasonable perception of reduced risk over smaller firms. In regards to technology consulting, those advantages may have been real or simply perceived. When choosing commercial real estate advisors however, often the risk increases significantly as the size of the provider firm increases.
The City of London realized, shortly after WWII that they would need a new airport, now known as Heathrow. The job of determining the location was entrusted to Alfred Critchley, a successful businessman. Consider the many criteria that must be considered when choosing the location for a major airport: Transportation access, proximity to the […]
Most commercial office leases contain a provision that requires the tenant to promptly return an estopple upon request. What exactly does this bit of legal jargon mean? It’s actually pretty simple: an estoppel is a common legal document that serves to 1) confirm various aspects of a lease agreement and to ensure that important documents […]
It seems like every accounting, real estate, and asset tracking software firm has published an article on the new FASB Lease Accounting Standards. I’ve noticed that they all tend to talk in generalities about the actual mechanics, and none that I’ve found seem to offer suggestions from a corporate user perspective aside from “Get ready!”.
When companies acquire or merge with other competing or complementary firms, real estate is, as a part of the transaction, generally a small overall concern. However, we frequently see major risk being absorbed by the acquiring firm with potential for a very negative surprise down the road.
Here’s the error: Due diligence of the real estate is often relegated to their investment advisory firm and/or an M&A legal team to simply provide a cursory review of the legal terms of leased real estate without much attention to the business terms.
A few months ago, I joined Amazon Prime. That’s a $79/year program that Amazon developed that gives members free 2 day shipping on Amazon-stocked products (which is most of the stuff that they sell). For me, having nearly anything I want conveniently delivered anywhere I want in two days is fantastic. However, the second time I bought from them
Any corporation with more than one office/branch/site is large enough to have real estate portfolio objectives. With just a handful of locations, the C-level executives are likely very hands-on in determining the best solution as real estate opportunities or decisions present themselves. Once the number of sites grows to a point where that oversight is delegated though
We located a building that had four vacant floors of about 25,000 SQFT each and made the landlord the following offer: The landlord would agree to have an entire floor painted and carpeted, and my client would lease just 5,000 SQFT with an option to take additional space at the same rent and a first right of refusal if the landlord found another user for the balance. Further, rather than put up a demising wall
Every business has a learning curve as it grows, and the collective wisdom learned along the way becomes an invaluable knowledge base. This is especially true in regard to your facility strategy. By analyzing what was done right and what could be improved in each new location or lease renewal process, you can develop rules to achieve the greatest return and avoid pitfalls.
It is a great time to be a tenant, and here is another example. Because almost all options are written with the assumption that rates will climb forever upwards, we’re seeing some interesting effects as rental rates tumble. Some options are literally not worth the paper they we’re written on. However, declining markets have made some usually unattractive renewal options have new value. Here’s why:
If you were around and fortunate enough to have a cell phone 30 years ago, you most likely had a Motorola “brick”. It made calls. It did not have a camera, email, mapping or navigation function, calculator, clock, or play music. It could act as a paperweight, mini-dumbell, or a defensive weapon in a pinch. Now, […]
I’m not crazy about condominiums. Here’s why: Other people (the condo association – which is often controlled by a very small group of individuals) get to vote on how to spend your money. Some of those choices may not add value for you or to your property. Operating expenses on leased commercial property work the same way. The management company, which is the property ownership
