Patience is a Virtue

It is an interesting commercial real estate market out there.  Office space is careening toward co-working spaces and creative expressions while vacancy rates range from 7% in Santa Monica and 17% in downtown Los Angeles (guess where the better deals are!)  The retail landscape is shifting from merchandise to service and hospitality but no, the shopping center is not dead.   Think of retail real estate like an open bed tomato truck: the industry is taking a sharp right turn and some of the tomatoes on top will fall out and make a splatter on the pavement but most of the load will make it to market. 

The real surprise is industrial, that boring mule of commercial real estate.  Vacancy rates in Los Angeles and Orange Counties are currently below 2%.  That’s right…2%.

There are a multitude of reasons for the tight conditions: old industrial buildings are being redeveloped as apartments or repurposed as creative office – think Silicon Beach and the Arts District in downtown L.A.  With the supply of undeveloped land naturally shrinking, industrial land is being priced out of the range that makes sense for industrial development.  And staring this shrinking inventory in the face is increased demand from “last mile” distributors fulfilling the delivery promises of Amazon and other merchants trying to compete.

The guidance I give my clients is to be patient.  If we don’t find the property that suits your needs on our first dive into the market, don’t panic.  My job is to keep my ear to the ground and scout properties as they become available.  But when they do, don’t hesitate!  I reported to one client looking to move their film industry special effects firm to Pasadena that a space had come up in a location they really liked.  The client said “Great…I’m leaving town for a week but when I return, let’s take a look.”  By the time he got back to town, the space was leased. 

The role of a good tenant rep broker is to educate his or her clients on the reality of the submarkets they want to be in.  If you are looking in downtown L.A. for office space, you have tons of choices.  If you’re looking for a warehouse space in Glendale or Torrance, be sure to budget in an extra month or two to find it. 

Keep it real and do the deal.

Should I Lease or Should I Own?

The economy is growing at a good clip and businesses are getting their mojo back.  The commercial real estate market is in a nice state of equilibrium.  Commercial landlords are getting decent rents and tenants can afford them.  But in the continuing low interest rate environment, many business are tempted to buy instead of lease.  After all, why should they pay so much rent if it is economically advantageous to own their own building?  Good question...complicated answer.

The economic factors that work in favor of ownership are very alluring and real: saying goodbye to rent increases and property tax surprises (when a landlord sells the building where you lease), control over building operating expenses, and depreciation.  An experienced commercial real estate broker should have the tools to plug salient data into a financial model and quickly analyze whether leasing or buying is to your advantage.  But there are several factors that your broker needs to run you through to see if you are really ready, willing, and able to be a building owner:

  • Buying a building requires capital for an equity down payment.  Think about the opportunity cost associated with those dollars; in other words, what could that money be earning you if put to other business purposes, i.e. new equipment that generates higher production output?

  • If you are considering buying a building that is larger than you need (SBA financing requires that the borrower occupy just 51% of the building), are you really prepared to take on the leasing risk and the property management responsibilities?

  • What is your exit strategy?  Will the building or commercial condominium be easy to sell on the open market, with or without your business inside?

 

These are complicated issues that should be talked through in detail with your real estate advisor.  No matter what your motivations are to buy, once you own, you are in the real estate business.  Think this through...do you want to be?

If you or one of your clients are evaluating whether to buy or lease, call me.

Adding Real Value for the Tenant

I get to brag every now and then.

 

I just wrapped up negotiations for a lease where I represented a residential real estate brokerage office.  We found the ideal building on a high profile corner in West Los Angeles that was right in the middle of their primary “farming” area – exactly where the company wanted to be.  There was only one thing missing and it was a big thing: exterior signage that would promote their brand to a high volume of traffic on the two busy intersecting streets that passed in front of the building. 

 

The building already had two large tenant signs on the exterior walls and the landlord deemed this was their limit.  But there was a small, innocuous address monument sitting in the landscaping on the corner.  It was the perfect place for a monument sign but in the 20 years the building had been standing there, the ownership was never motivated to erect one.   That is, until Aaron Weiner came along, wielding the colossal leverage of a 2,000 square foot tenant.  (Yes, that’s a little sarcasm!)  And so I pressed for an opportunity to create a benefit for my tenant far more valuable than grinding for a little lower rent rate.

I enlisted the support and cooperation of the listing broker.  Together, we convinced the landlord to engage a sign contractor and develop a design.  I demonstrated to the landlord how he could recover 100% of the cost of the sign from the tenants who appeared on it.   When they presented the design to the tenants in the building, the proposition was well received and several positions on the sign went very quickly.  But the landlord was slightly concerned about the two slots that remained.  So I explained how those empty positions on the monument would  serve as a magnet to attract new tenants!  That sealed the deal.

Some of the credit goes to the landlord who was intelligent enough to embrace the benefits of the sign.  But I had the satisfaction of scoring an unlikely victory for my client and creating long term value for the landlord. 

Unfortunately, I was unable to convince the owner to put my name on the sign.  (More sarcasm!)

When a Sublease Might Just Be the Answer

A business looking for a good real estate deal should always be open to a sublease.  This arrangement can be a bit complicated because it is really a deal between three parties: the tenant currently occupying the space, the landlord who must approve the deal and the subtenant.  But the economic advantages can easily outweigh the aggravation of getting all of the parties aligned.

When negotiating a lease, the property owner – the landlord – is first and foremost concerned with the value of their property.  The rent rate negotiated translates into net operating income and that is a key factor in calculating value.  This is why landlords will offer free rent in order to keep the rent rate as high as possible.

For a tenant looking to sublease, their focus is on cash flow: finding a subtenant to cover all or most of their remaining rent obligation.  Negotiations with a tenant trying to sublease their space will be focused  on their anxiety over paying rent for a space they are moving out of.  The pressure is on to find a subtenant as soon as possible and stanch the bleeding.  And a good broker should have the skills to leverage that anxiety to get the deepest discount possible in return for providing the immediate relief of  a paying subtenant.

There is an important caveat that brokers should always tell their clients in this situation:  that great sublease rate you were able to negotiate with the tenant might well go up when dealing with the landlord when you want to extend your lease at the property. 

To summarize, when you’re considering a sublease, both carpe diem (seize the day) and caveat emptor (buyer beware) apply.  

Don’t Mutiny A Difficult Landlord

Many of you have read my previous post admonishing you to “Pick Your Landlord Wisely.”  Well, the same wisdom that recognizes the best landlord qualities also has to make the most of stubborn and inflexible landlords.  Does that mean a tenant should run the other direction as fast as possible when he or she encounters one?  No!  What I do advise is that you make sure you have a good tenant rep broker getting in the mud on your behalf.  If you end up with a good, thorough lease, the only thing the landlord can do to interfere with your tenancy will be to neglect their maintenance obligations.  And your broker can even work in some lease language that will give you plenty of recourse should that situation ever arise.

I recently slogged through lease documentation that was a royal mess.  The lease appeared to be a blend of two or three different lease contracts cobbled together and there were embarrassing flaws throughout: redundant language, paragraph numbering that was out of sequence, and a mash up of references to landlord/tenant and lessor/lessee.  If that wasn’t aggravating enough, the landlord balked when I (and his own broker!) recommended changes to this “Frankenstein” lease to clean it up.  Then he tried to sneak into the second round of lease comments some common area charges that were not included in the signed letter of intent (lease offer).  Ugh!

If I can’t get logic and fairness to prevail, at some point I will recommend to my client that we walk away from the deal because the final contract will be full of holes and the captain of the ship – the landlord – cannot be trusted to keep the vessel afloat.  But if your broker (together with your attorney in situations like this) can overcome the landlord’s stubborn attitude and get a solid lease signed, you should be fine except for a little queasiness from the turbulent negotiations.   In the end, a watertight  lease will stay upright in choppy seas.

The Unavoidable Issue Of Tenant Creditworthiness

Recently, I was working with a tenant whose entertainment-based business was doubling year over year.  He needed to move out of his 4,000 square foot space and find something around 12,000 square feet to facilitate contracts that were coming down the pike from major entertainment companies and studios. 

We found the perfect building in the perfect location and lobbed a reasonable offer in to the landlord.  We were making progress negotiating terms but when the landlord looked at the tenant’s financials we hit a snag; well, more than a snag – a brick wall.  The landlord was concerned over the tenant taking on rent that was triple what he was currently paying and demanded a huge security deposit to offset what he perceived as the risk in leasing his building to my client.  The up-front cash demand killed the deal. 

My client was extremely disappointed.  This is understandable but I explained to him that I have successfully navigated negotiations for tenants facing greater challenges:

  • I had a client who had a recent bankruptcy on their record that would have cut off discussions with many landlords.  I coached them to present a story that explained how their recent financial troubles were unrelated to the business that would be operating in the space and paying rent.  We got over the hump and negotiated a very fair deal for them.
  • I had just finished negotiations on a 10 year lease of a surface parking lot in an upscale Westside commercial district for a client who was an immigrant from south Asia and who had just become a citizen of the U.S.  While he had several years of experience in the parking lot management industry, he didn’t have two nickels to rub together.  We got the deal done – with a sophisticated landlord, no less – without providing any financial statements whatsoever.  The tenant did have to pay an enhanced security deposit but I negotiated terms that will get most of it refunded to him after the first couple of years of the lease.

Tenants with less than stellar financials will occasionally encounter a very skittish property owner but there are others out there that will be much more open to leasing to a promising business.  

A good tenant representation broker can help write the story that will end in “happily ever after”.    

No Need To Succumb To Unfounded Fears

Far be it for me to tell you a good real estate broker and tenant advocate can build a protective force field that will protect your business from the occasionally harsh winds of the market and the law.  But I am here to tell you that there is no need to be afraid of the monster under the bed.  There is nothing under there…really.

I had a manufacturer client that had been doing business in the same building since their inception 55 years earlier.  As a concession to getting some rent relief from the family that had owned the property since the dawn of time, they agreed to a six month cancellation clause in the event the property was sold.  It never occurred to my client that might happen…and then it did.  When they got the six month notice from the new owner they were blindsided.  That is when I was referred by their banker to help them find a new home.

The president and CFO of the company were panicked.  How could their established manufacturing company possibly find a new location and move there in six months?  Their fear was existential  -- was the company doomed?

With 25 years of property management experience , I knew how hard it is to physically pry a tenant out of a space.  Ultimately, the law will side with a landlord against a tenant that is ignoring valid demands to vacate their premises but it takes time and a lot of legal gyrations.   My message to them was to take action toward the goal of vacating the property and communicate their progress to the new owner.  Six months might turn out to be a year but if they were responding in good faith to the demand to leave, the landlord would certainly spare themselves the legal cost of being draconian.  I also reminded my client that the new owner had plenty of hurdles of their own to clear in order to make the necessary changes at the property to accommodate their business there.

My client settled into their new home across town approximately 10 months after I signed on as their broker.  They followed my advice and kept the new owner informed and in the end, the scary monster under the bed turned out to be Shrek.  OK, maybe a little ugly but docile.

Hire experience and let it be your guide.  Don’t go it alone.

Tenant Improvement or Landlord Improvement?

One of the fundamental economic facets of a commercial lease is the value of the tenant improvements that that are constructed for the new tenancy.  Whether it is an office building, shopping center or an industrial property, paying for the construction of needed improvements or upgrades is a major consideration for both the landlord and the tenant.  In the case of a tenant improvement allowance, the landlord contributes a stipulated amount and the tenant pays for any cost overruns.  A good understanding of the logic behind these improvements can go a long way toward getting a little more for the tenant.  The key is to look at the nature of the improvements.  

A Heartwarming Landlord Story

Putting “Landlord” and “Heartwarming” in the same phrase may seem farfetched to some.  The truth is, landlords’ hearts freeze over only when tenants demonstrate a lack of understanding or respect for the contract they both signed.  When a tenant shows proper respect for the contract, the landlord can be their best friend.

Deploy Your Crystal Ball For Real Estate Planning

As a professional commercial real estate broker, I have come to the heartbreaking realization that my clients just don’t think abouttheir real estate every day; indeed, they think about it only when they absolutely have to.  The problem is that real estate decisions sneak up on you and then you find yourself with limited time to make them, and limited choices.

Sometimes The Real Estate Is Only One Leg Of The Race

When you are negotiating to purchase a business part and parcel to accelerate your growth, expand your business range, or increase your market share, there are two critical facets of a sound economic deal: the valuation of the business and the cost related to the real estate. 

When the real estate is for sale with the business, establishing the intrinsic value of the real estate is more or less a function of two standard appraisal practices: analyzing value by looking at comparative sales, and by looking through the lens of the highest and best use of the property.  

It becomes a bit trickier when the real estate is retained by the seller and leased to the buyer or is leased in the first place.  The rental costs of the real estate have a huge impact on the net income projections of the business and cannot be negotiated separately from the acquisition of the business enterprise.  Doing so puts untenable pressure on the dealings for the second piece and negotiations could breakdown altogether.  The two major financial pieces must be on the table at the same time. 

I am typically involved in the buy side and recommend to my clients that they let the business seller express their preference of whether they want to get the best possible pricing on the business or on the real estate.  Then everyone involved knows what part we will be negotiating and understands how the two are linked together.

Exercise both legs simultaneously or else you will be limping – or worse, hopping – toward your future success.

Keep A Scorecard When Searching For Properties

One of the messages I always convey to new clients when embarking on a search for a new location for their business is that it is a process; that is, the search itself serves to bring into focus what is important to them and that it is OK to shift their priorities along the way.  Nothing brings must-haves and deal killers to the surface better than actually touring several properties and their respective neighborhoods. 

Sometimes several of the tenant’s stated priorities are in flux and I find it helpful to keep track of the properties we have viewed with a scorecard that rates key criteria on a scale (I like 1-5; 1-100 or even 1-10 risks everyone getting lost in the weeds.)  Here is a list of criteria I rated for a client recently:

  • Budget – budget often evolves from the tenant’s original rent target.  When it comes to the economics of a given space, employee satisfaction and productivity trump rent.
  • Parking – abundance and security were key parking considerations for this client
  • Proximity to neighborhood amenities – the client wanted to be in a walkable neighborhood where their employees felt safe and where there was an array of food and personal services available.
  • Proximity to client’s manufacturing facility – as our touring progressed, neighborhood amenities moved ahead of being close to the industrial submarket where they manufacture their products and this slid down the priority list.
  • Proximity to other business in the same industry and industry-supporting services – this matters when you are in the fashion or media industry but not so much if you are an accounting firm.
  • Building and premises image and functionality – they valued a creative office environment and lots of natural light.

When I introduced the client to the scorecard I made it clear that it was not intended as a tool to choose a property based on the overall highest score; rather, it was a way to consciously take stock of their shifting priorities and steer clear of confusion that can derail what is always a complex decision. 

In the end, the tenant got the location they wanted and just as importantly, knows how they got there.

 

Getting Creative With Creative Office

One of the hallmarks of “creative office” space is the deconstruction of the walls that divide everybody and the collaboration and fresh ideas that spring from large, open spaces. Many of the images we see are of the most dramatic spaces created for large tech juggernauts. While these pictures are eye-popping, they also tend to scare off small and mid-sized business in more traditional industries. But fear not – creative concepts can be applied in smaller offices with great functional and aesthetic effect.

I am working with a regional accounting firm eager to change the feel of their space. This desire is motivated by the most profound reason: they know that they are competing with other firms to attract the best and brightest millennial accounting talent and want to present an environment that is cool and alluring. Want to know the secret to achieving this goal in a traditional office building setting? One word: furnishings.

Most people think of bow truss overhead structures, exposed air conditioning ducting, and concrete floors when creative office is mentioned but furniture systems are at the root of the functionality of creative space. Work surfaces are replacing work stations. Task seating is critical to wellness and productivity over the long term. Soft seating with style contributes mood enhancing color and, well…style.

For the accounting firm remodeling their existing offices, we started with a fresh space plan that carved out the open space. Then I set up a meeting with one of the largest dealers of modern office furnishings who could not only present a vast array of new concepts and materials, but could help them with the design and “spirit” of the space.

“Creative” not only describes the finished space but the inspiring process of getting there. Get a good broker on your team who can lead the way…and have fun!

The Hidden Value In A Lease Option To Renew

The lease option is one of the most common add-ons to a commercial lease and is more often than not granted by the landlord when asked for.  When the landlord drafts the lease they drop in their standard lease rider or amendment language.  There it is: the tenant may renew the lease for five years (typically) so long as they give the landlord advance written notice by a defined deadline.  End of story. 

No…it isn’t!  Also commonly found in option language is a clause that states that the option is “personal” to the party who signed the lease and cannot be transferred.  Most tenants don’t give much consideration to the possibility of assigning their lease down the road and so they don’t give this much thought.  But consider the following real situation I just negotiated for a retail service business in West Hollywood:

The shop space is in a burgeoning retail district in town that is experiencing exploding rents just a block to the west.  First, we were able to negotiate a set rent for the option period, so we avoided surprises that can come with a “fair market rent” reset.  Then I asked to delete the sentence that said that the extension option was not transferrable.  The landlord did not hold a strong position on this language – it has just been in their leases since time immemorial – and so he agreed to the change.

Now let’s project into the future.  The tenant decides for whatever reason to sell the business a few years down the line.  Let’s say there are three years left on the lease.  The high rents from a block over have migrated into my client’s neighborhood making the rent we negotiated well below market.  Having eight years of below market rent (three remaining on the original term plus five in the option) versus just three could positively impact the value of this business by $500,000.

Now that’s keeping your options open.

A New Location Involves So Much More Than Real Estate

It is time to find a new location for your business.  You know this is going to be a time consuming pain in the neck, so you call your trusted tenant rep broker – your advocate for all things real estate – and give the command to get started. 

No doubt, a move is arduous and complicated, but it’s not just about real estate.  Every professional advisor that your business depends on gets involved in a change this big; indeed, your corporate attorney, your CFO, your outside accountant, your insurance agent, and your HR department all have a role to play.  And the outside business growth consultants that you recently engaged to help steer your business to a successful future?  Yeah, them too.

Your real estate broker is the scout that runs out in front of the expedition, reporting back on market trends and available space for lease or purchase.   But it is also the broker’s role to know how each professional on the tenant’s team will be processing that information.  In particular, the broker would be wise to open a line of communication with the growth consultant to insure their efforts are coordinated to achieve a common goal.    I often encounter tenants who do not fully appreciate the teamwork involved.  As the consultant that initiates the relocation process, I am in a position to call to their attention the need to draw their other business experts into the fold.

The real estate broker may run ahead of the pack at first, but a lone wolf could jeopardize your goals. 

The Varied Reasons For Picking A Business Location

The rise of new business sectors is pulling us back to the old cliché concerning the three fundamental rules of real estate: location, location, location. 

When you look at the most expensive office submarkets in Los Angeles you might wonder why firms would choose to locate there when there are so many lower cost alternatives.  Very rarely is more than a few cents per square foot of the rent premium related to the physical attributes of the building and its amenities.  Similarly, only a few cents differentiate the prominent location on a major street with a building located on a secondary artery (on L.A.’s Westside, think Wilshire Blvd. vs. Olympic Blvd.)  It is business synergy and the people behind it that creates a “have-to-be-there” location .  For once, the developers can’t even take credit!

The classic example in Southern California is Silicon Beach, the submarket originally comprised of Santa Monica and Venice.  Due to demand pressures, its borders have since expanded.  Within those boundaries is a culture of adventurous, entrepreneurial creativity that has become a vital jolt of energy to every one of the businesses there.  Thus, you have firms willing to pay nearly double what they would have to pay in, say Westwood, barely 4 miles away. 

I toured a social media app client through Santa Monica recently to look at buildings to lease.  Parking is impossibly scarce, mid-afternoon traffic is mind-numbing (and blood pressure-raising).  But in one building, we crossed paths with another young tech worker.  When she introduced herself to my client and they realized they were big fans of each other’s tech offerings, the connection was palpable.    And the value?  Arguably, priceless.

Sometimes there is a submarket where your business just has to be.  When that is the case, you still need a good real estate broker advocating for you and negotiating aggressively on many fronts.  But the rental rate may not be one of them.  

Ask Correctly and Ye Are Likely To Receive

Even the best businesses run into cash flow problems.  There are often sources of internal capital that are available to cover these dry spells including cash reserves and credit lines.  When those are not available, often the biggest help can come from the landlord the business sends their rent check to every month. 

Inexplicably, most tenants assume the fetal position when dealing with the landlord.  Think of the term – the “lord of the land.”  It’s amazing that this medieval concept has survived to the present day.  In my previous life as a property manager I often dealt with tenants begging for relief and mercy from the landlord.  Such a misguided approach to seeking financial assistance rarely got the tenant what they were asking for or what their business really needed. 

A tenant needs to approach the relationship with their landlord from a modern perspective; that is, two complimentary businesses in a contractual partnership.  When you view things in this light, the request for rent relief becomes a simple business transaction: an investment by the landlord in the tenant’s business.  Think about it: when a business solicits investors for money, they sell the positive prospects for success.  The tenant needs to characterize the trouble they are facing as a temporary setback caused by market conditions or perhaps a business miscalculation on their part.  In any event, their pitch to the landlord needs to emphasize the fact that with some help, the problem can be neutralized or reversed and that the ultimate result will be a stronger tenant who will be better able to fulfill their contract with the landlord.  

This strategy works when you get sound guidance from a good real estate broker and advocate.  I recently coached a client of mine and helped them get $60,000 of rent relief.  In addition to helping them word the request using the proper, positive tone, I advised them to propose repayment terms that would allow them to pay back the balance due ahead of schedule and leave the landlord feeling like they had made an excellent investment. 

Beats begging, doesn’t it?

For The Best Results, You Need A Great Coach

I imagine many of the readers of Lease Intelligence play golf, tennis, or another competitive sport.  The joy of getting better over time is the great allures of playing sports.  But certainly, there are aspects of your game that you would love to improve.  The difficulty of breaking through these performance barriers is a trade-off frustration.

Imagine if you had a dedicated, professional coach watching your every move.  Do you think your performance would be better?  And what if that professional coach was available at no cost – completely free to you.  Would you be all over that opportunity?

That is what an experienced tenant representation broker is – your business’ free real estate coach.

My friends, tenants are getting “the shaft” every day.  Many of you have heard me chant this over and over again.   Sometimes, they get it from the landlord.  Candidly, a lot of the time it’s self-inflicted – they don’t know what they don’t know!  Yet they go it alone, making mission-critical real estate decisions and negotiating a lease without the help of a good coach – their advocate – making sure that lease is well negotiated and tailored to their unique needs.

This is how we approach things at The Tenant Group – it is why the company was formed in the first place and why I joined their ranks last month.  Listen, we enjoy what we do.  It’s fulfilling to us.  It is our passion.  What looks like a minefield to the tenant is a road map to us.  

You call me…invite me over to your office…we sit down and talk.  We put your objectives and priorities on the table and we see if we’re a good fit.  I mean, my clients love me but I’m not right for everybody!  But in any event, don’t go it alone.  You really do need an advocate when you’re looking to lease or buy commercial real estate

Don't Be Paralyzed by Fear

In every lease I negotiate, I find my years of experience managing properties for the landlord of immeasurable value.  My understanding the landlord’s business guides me to negotiate where I know I can get great results for the tenant and helps me set the tenants expectations where I know the landlord will be immovable.  This varies from deal to deal and an experienced tenant rep broker can tune in to the economic forces at play in every situation.

One of the more challenging terms to negotiate is the rent for future renewal options.  Most landlords default to “fair market value”.  I always try to fix the option rates for my clients, but sometimes the landlord digs in his heels and the best I can do is negotiate in the lease language to insure “fair market value” must be arrived at fairly and cannot be set arbitrarily by the landlord.   As lease terms get longer and options are further out in the future, it is time to concede that “FMV” is really just fair to the landlord.  I have to explain to my tenant clients sometimes the fundamental principle of the landlord’s business: with the risks they assume when they invest in property, they are entitled to reap the rewards of an improving market. 

 I had a client who was looking to lease retail space in downtown L.A.  We negotiated a ten year lease and managed to cap the rent increase for the first five year option, but the landlord held firm on FMV rent for the second option.  We are talking about 15 years down the line.  The tenant was mortified.  “The landlord could double or triple my rent!  I can’t stand it!”  I had to talk my client off the ledge.  I did so by explaining that fair market rent is what a reasonably successful tenant can afford to pay on a sustainable basis.  To set the rent at a higher level only guarantees that the landlord will have a failed tenant and a vacant store.   And if this client’s business was still in this location 15 years from now, chances are he is operating a reasonably successful store!

Risk is inherent in commercial real estate whether you are a landlord or a tenant.  Don’t be paralyzed by irrational fears.

Search For Answers

I wish I could tell you I have all the answers but I do not.  (Alert the media!)  Grave concerns perceived by my clients show up during lease and purchase negotiations that I cannot resolve with persuasion or market knowledge.  Do you have kids?  Ever notice how your child will take an outsiders advice more seriously than yours?  OK, now we’re on the same page.

When negotiations get into crunch mode and the deal is on the line, the tenant may begin to wonder whether their broker’s advice is offered in their best interests or in the interest of closing a deal and collecting a commission.  That is when I often call in outside experts that can provide facts and perspective that will lead to a wise decision by the tenant that really does support their objectives.  These outside resources include attorneys, accountants, bankers, architects, contractors, and entitlement consultants.   And as a tenant advocate, I have a large stable of them.

In one recent deal, my client was negotiating to purchase a property for development in a , shall we say,  “controversial” submarket from a seller who had been pursuing entitlements to do his own development.  My client maintained what I thought was an overly pessimistic opinion of whether and when the entitlements could be secured.  The parties were at an impasse and talks stalled.  I knew that arguing my case would only have been self-serving.  So I got permission from the seller to have his entitlement consultant meet with my client.  The informed intelligence of this consultant answered my client’s questions, put his mind at ease, and got the negotiations moving forward again.

A good tenant broker will search for clarity…and go to the ends of the Earth to find it.