Leasing 101

/Tag: Leasing 101

Capital Improvements


What are Capital Improvements? Capital improvement is work done to a commercial property (office, retail, or industrial) that is undertaken to improve or extend the normal economic life of an existing structure.  Deductions are not done for capital repairs, the cost is added to the cost of the property. Why does this matter to tenants? The cost of a capital improvement cannot be deducted from income from the building.  It must be added to the cost of the property. In other words, the landlord cannot treat these type of repairs as an expense. How does this affect my cost in a [...]

Capital Improvements2015-05-12T01:32:59+00:00

Common Area Defined


Common Area defined For lease purposes, common area is defined as the areas of a building that are available for the nonexclusive use of all its tenants, such as lobbies, corridors, and parking lots. Common Area Maintenance (CAM) Common Area Maintenance (CAM) charges are charges that are paid by the tenant for the upkeep of areas designated for use and benefit for all tenants.  CAM charges are common in commercial transactions and may include lobby areas, centralized bathrooms, parking lots and more.  Capital Improvements are commonly included within CAM charges when a tenant receives a statement from the landlord. Why does this matter [...]

Common Area Defined2017-10-14T13:49:53+00:00

What is Rentable Versus Usable SF


Loss Factor Loss factor is the square footage in an office or industrial building that is not usable by the tenant.  This includes common area, hallways, lobby areas, etc.  The way to determine the amount of rentable SF in an office building is by multiplying the space you want to lease by 1+ loss factor to go from usable SF to rentable SF.  An example is if you owned a (very small) 5,000 SF small office building and 500 SF was devoted to common area you have a 10% loss factor.   If a tenant wanted to lease 1000 SF in this [...]

What is Rentable Versus Usable SF2017-10-14T13:49:53+00:00

How Tenant Rep Brokers Level the Playing Field


Tenant Representation Brokers Know the Cards and How They are Played We are full time commercial real estate experts that have landlord and tenant rep experience.  We have been on both sides of the table and know how to achieve goals for our clients with a track record to prove it!  We fully understand the business points of a lease and know what concessions are acceptable in the market 5 years ago, now, and in the future because do deals throughout the State of Texas. We are big believers in a tenant representation process and strong negotiation strategy.  We take our [...]

How Tenant Rep Brokers Level the Playing Field2017-10-14T13:49:53+00:00

Misfit Office Tenants


My definition of a “misfit” tenant is an office or industrial user that is allowed into a space that does not fit the use of a traditional office or industrial tenant.  In softer markets landlords may attempt to maintain occupancy by going a little further than giving attractive concessions.  When a landlord crosses the line and closes a deal with a misfit tenant, the entire building  (including the tenants) can suffer. Characteristics of misfit tenants for office space can vary based on the building, but the most common misfit tenants are the following: Salons and Barbershops – Salons use a lot [...]

Misfit Office Tenants2017-10-14T13:49:53+00:00

Rent Increase Triggers Hidden in Plain Sight


We've discussed  lease negotiations for office and industrial space multiple post, but have not gone into too much detail yet on why negotiations are so important! One of the benefits of negotiations is identifying and removing cost increase triggers in the lease that can be debilitating to a small or midsized business. If the landlord decides to repair or replace any number of items that could be considered a capital improvement the tenants will pay additional rent or CAM charges in a “standard lease”.  The impact of these triggers can further impacted by the type of financing the landlord decides to [...]

Rent Increase Triggers Hidden in Plain Sight2017-10-14T13:49:53+00:00

Like a BAD Neighbor…


Whether you're a tenant in an office, retail, or industrial space you run the risk of having an undesirable neighbor. Bad tenants are loud, rude, inconsiderate, sometimes dangerous, and always bad for business.  Knowing the landlord and property management's history is a crucial factor in determining how peaceful and productive your office space will be in the months and years ahead.  Responsive management will enforce lease restrictions on noise, foot traffic, and safety before it becomes debilitating to your business. Some tenants believe strongly in getting testimonials from other tenants before signing a lease.  This is always a good idea, but [...]

Like a BAD Neighbor…2017-10-14T13:49:53+00:00

Understanding NNN Leases Part 2


How do we control cost? If your looking at this post, you have probably experienced the unexpected rent increases as a business owner.  Tenants do not want the volatility or extra burden that a NNN lease brings to the table.  Here are a few ways to control NNN cost.  Prioritizing NNN in your negotiation strategy is the best opportunity.  Every Landlord has different concessions that could be made to help control cost.  We have negotiatied NNN caps in some cases, where others we implemented stronger controls that govern how these cost would be allowed to impact our clients.  Have options, while [...]

Understanding NNN Leases Part 22017-10-14T13:49:53+00:00

Understanding NNN Leases Part 1


What is a NNN Lease? A triple net lease or Net Net Net Lease is a type of lease where the tenant pays their share of the common area maintenance, taxes, and insurance.  A NNN lease passes on the instability or burden of market volatility from the hands of the landlord (as in a full gross lease) to the tenant by making the tenant absorb any increases in Common Area Maintenance, taxes, or insurance.  It takes the burden off the landlord and places that burden on the tenant. How do I calculate my rent with a NNN lease? The “base rent” [...]

Understanding NNN Leases Part 12017-10-14T13:49:53+00:00