How to Spot a Desirable Landlord

How to Spot a Desirable Landlord _ Tenant Advisory Group

The landlord is an integral part of the commercial real estate leasing experience, which is why this person or entity needs to factor into any final decisions. A lot can be revealed about a landlord by the way they handle the negotiation process, as this is a window into how they treat existing tenants. For example, someone who tries to use bait-and-switch tactics isn’t going to change once you become a legally-bound renter! An easy way to tell a good landlord from a bad one is to identify if they value quality tenants over maximized profits.

Communication is Key

Good landlords are transparent and responsive, especially when they want you as a tenant. Ideally, a future landlord will stay in communication regardless of the situation, providing explanations for any lapses in response. Remember, there are most likely other deals in process that may prevent you from winning the space. However, a worthwhile leasing professional will work with a prospective renter to find a different available space.

Well-Capitalized is Ideal

When a landlord has a large amount of money to negotiate with, they are referred to as “well-capitalized.” There are a variety of reasons why a landlord is flush with capital, such as a recently refinanced building, or having a REIT or sovereign wealth fund as owners. Regardless of the source of funding, this means they are able to offer larger concessions in the form of free rent or tenant improvement allowances. In addition to incentive packages, well-capitalized landlords are able to invest more money back into improving the building. Independently-owned operators typically don’t have access to the large amount of funds needed to pay for a tenant’s buildout or even fix ongoing problems properly or in a timely manner.

Professionals are Best

Tenant Representatives are generally well liked by successful landlords as they work with all parties involved to ensure terms are met, stipulations are understood and proper channels are followed. The quality of business a tenant representative brings to the table – high-quality ancillary professionals – often encourages landlords to make more concessions on a deal with either a current or new tenant.

However, short-sighted landlords can become concerned about paying a broker to renew a tenant or acquire new business. These owners don’t take into account the long-term benefits, rather than the short-term costs. It demonstrates a potential unwillingness to pay to keep the building in good shape, repair the elevator or HVAC or clean the windows and building. If a landlord pinches pennies now, they will surely react poorly down the road when something doesn’t go their way.

The lowest price option is not always the best choice, as it commonly comes with a lack of amenities, service, upkeep and concessions. While lower rent is attractive, there is much more value derived from concession packages. Additionally, if a business uses its own money for a buildout then they won’t have that capital available to invest in the business, making it a very costly way to use available funds.

Landlords gain a lot of value when they sign new tenants or retain existing ones, especially if the building is up for sale, and good landlords know a broker can help them do exactly that to increase the value of their building.

Money Saving Lease Language

Money Saving Lease Language _ Tenant Advisory Group

Reviewing each section of a commercial lease is a long process, but it’s essential to identifying ways a tenant can save money. One often overlooked area of these documents is the array of options that can be used to securitize a lease, as well as the Surrender Clause upon lease expiration. Here are a few different options a tenant should consider when negotiating their lease.

Types of Securitization

There are multiple options and opportunities when it comes to security deposits. Review your options thoroughly to decide which makes the most financial sense for your business.

  • Cash Security Deposit: A landlord will hold this in an escrow account, and it is returned if the space is in good condition at the end of the lease.
  • Letter of Credit: The bank holds the money while it earns interest. However, there is a fee of one-half to one percent each year.
  • Checking Account: The money is held in a checking account, and it can’t dip below the amount of the deposit. This can allow tenants to keep the money in their own account, which is beneficial if the business wishes to acquire equipment, property or another large purchase, as it shows stronger financials.
  • Surety Bond: This acts as an insurance policy if things go poorly, and it doesn’t impact credit. Surety bonds are available for larger companies. If the landlord draws upon the security deposit, then the insurance company will cover it.

Expensive Lease Language

Carefully read the language of the lease as it pertains to the Surrender Clause (the condition the tenant is supposed to leave their space in upon lease expiration), as different terms carry their own meanings and some can require a lot more work and money. For example, retail landlords often want the space returned in a “white box” condition. This can be quite expensive, as it means moving furniture, deep cleaning and removing wires. If the Landlord requires the premises to be left “in the condition that existed when the premises were turned over” this could include reversal of any improvements or alterations done to the space. Tenants often underestimate the cost of these requests versus the value it will have for the business. However, you can avoid these expensive requirements by negotiating the space be returned to “broom clean” condition. Working with the language of the lease to favor the tenant can save a significant amount of money and time for a business.

With every lease, there will be an opportunity to negotiate both Securitization and the Surrender of Premises. It is best to use a qualified commercial real estate broker on the Tenant’s behalf in order to achieve optimal savings and negotiate the most favorable lease terms.

Mastering the Lease Negotiation

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The lease negotiation has the potential to provide several, lucrative concessions and rights for the tenant, as long as they are requested and properly defined. What most tenants don’t realize is that most landlord’s are sitting on a pile of money that is available to be allocated towards the incoming tenant in the form of lower rent, free rent, tenant improvement dollars or a combination of the aforementioned concessions. How that money is distributed is determined by the terms stipulated in the lease.

Many believe stronger financials will equate to a more expensive deal. However, the lease revolves around the landlord’s risk of the tenant. A company with a strong financial history represents less risk, which means the landlord will offer better terms to entice the potential tenant. The lease negotiation process is similar to how a bank assigns a loan- the terms are based on the amount of risk. Since the landlord is investing in the tenant, the landlord will often spend money upfront to secure a tenant with the highest probability that they’ll pay rent throughout the entirety of the lease. (If a business goes bankrupt mid-lease, the landlord has the potential to lose a significant amount of money.)

Where many inexperienced commercial real estate negotiators miss opportunities in the lease is by not building in provisions for flexibility. This becomes a critical factor for rapidly growing businesses that often take on far more space than necessary to account for projected growth. While it is smart to plan ahead, at Tenant Advisory Group, we recommend you take on the space you need today with a moderate amount of excess room for planned growth. The reason being is that the office is often the second largest expense of a company. Paying for space that is not being used will unnecessarily burden the financial statements and inhibit a business’ ability to grow. Building in flexibility through rights of first refusal or rights of first offer is a far more effective and economical way to foster a company’s growth. Rights of first refusal and rights of first offer create the opportunity for a business to expand at a future time, if and when necessary.

An extremely valuable piece of negotiation leverage is the right to terminate. This assures a growing business can leave a small space, and move into a larger one when the timing is right. How it works is it provides an opportunity to renegotiate the lease while setting a cap on the rental rate. It can extend the terms of the lease to keep the rent lower than the market rates, and if the market prices drop, you can leverage it to lower rent. Another great piece of leverage is the right to renew, though to be most effective it must stipulates cap on how high the rental rate will be at renewal. Similar to the right to terminate, it allows the company to renegotiate the rent down and prohibits the landlord from renegotiating the terms back in their favor.

In order to obtain the largest concession package, demonstrate strong financial security; request a right of first refusal and/or right of first offer, a right to renew and the right to terminate. When combined, these facets of the lease will significantly improve the quality of life for a business while reducing the strain on the company’s financials.

How to Find the Right Office for a Startup


Startups, by nature, are always changing, and the last thing a budding business needs is to constantly search for and move into new spaces. As a company grows in both size and revenue, the physical office space will need to provide the flexibility to house the necessary changes (e.g. additional computer stations, conference rooms, etc.). Here are a few pointers to consider when looking for a location to help the business stay put longer.

Consider Rapid Growth

In order to avoid overcrowding an office, search for an office space that accounts for reasonable projected growth. Oftentimes, an extra ten or twenty percent of space can prevent a lot of issues from arising. While it may seem like an unnecessary expense, it has the potential to provide greater returns in the future by avoiding terminated lease fees as well as eliminating the hassle and expense of needing to sublease and seek a larger space before the lease expires. One way to compensate for the increased rent expense could be to use that extra square footage as leverage to receive better lease concessions, such as more rent abatement, tenant improvement allowance or termination rights.

Consider the Location

When it comes to real estate, the location of the property will play a critical role in the success of the business. You’ll want to consider the office’s location in regards to current and potential clients, vendors and employees. If the space is hidden, it’ll make it difficult for prospective clients to find the business. The location will also play a role in employee retention and talent acquisition. An office that is far out of the way will reduce company morale, and will be unattractive when trying to acquire top talent. It will go a long way in increasing employee happiness if the location is near quality amenities, such as trendy restaurants and entertainment.

Consider Your Needs

A critical aspect that should be heavily considered during the search is the layout of the office and its amenities. Does it fit the company brand and culture? A financial services startup may need a more structured environment with cubicles and sound proofing. Whereas a creative firm will want an office with open spaces for collaboration. Regardless of the industry, the layout should be conducive to the business. Also, the amenities of the office should play an important role in the selection process, as they can make a difference in employee morale, which will impact productiveness of the workforce. Will there be enough conference rooms, kitchens, restrooms or break rooms? Confirm if the space will be able to accommodate the specific needs of an industry. For example, a company with heavy IT needs will want a space that is able to power and protect all of the equipment.

Finding an office that is a perfect fit for a business is a challenge, especially for a rapidly growing startup. When beginning the search consider the projected growth, business plan and the needs of the company to find the best suitable space. The office search is a daunting task that should be tackled with a long lead up time, preferably one year in advance. The long lead time works in favor of the tenant, and is necessary to account for the lengthy processes of site selection, touring comps, term negotiation, attorney review and architectural design, permitting or construction work. Working with a qualified commercial broker can save a growing business tremendous time and money throughout the leasing process.

The South Loop Continues to be Chicago’s Neighborhood to Watch

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The Chicago real estate development industry has been buzzing this summer with dozens of innovative new projects aiming to break ground in the next year in the booming South Loop neighborhood. Tenant Advisory Group predicted at the end of 2014 that the South Loop will continue to be a red-hot neighborhood, and it looks like this momentum will last through 2017 and into 2018.

The recovering economy has brought a resurgence of demand for the neighborhood’s urbanized lifestyle. Construction began last month on Prairie Court Townhomes, a luxury development at 18th and Prairie Ave. that consists of nine buildings offering 55 four-story townhomes for interested buyers. Those looking to rent in the South Loop should keep their eye on some of the high-profile towers coming to the area, including an all-glass, multi-tube designed rental apartment tower and retail center proposed for 1326 S. Michigan Ave.

Commercial and medical spaces are popping up as well. Rush University Medical Center announced it will bring an outpatient center to a new development replacing the former National Letter Carriers Association building at 1411 S. Michigan Ave. The building itself – a mixed-used residential development – will break ground this year, and the medical facility will open in 2018. Additionally, the Essex Inn expansion and the Riverline mega-development will bring more business to the South Loop.

There are plenty more proposals in the works that could drastically change the area, including a 62-acre site of former railroad land southwest of Clark Street and Roosevelt Road that could become its own neighborhood. Tenant Advisory Group continues to predict the South Loop is the future River North.

Landlords Can’t Afford to Ignore Traditional Tenants over Tech Companies

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It’s an exciting time in the Chicago tech scene, with new startups changing the entire face of our commercial real estate market. This infusion of creativity and drive is fantastic for our city, but is it really driving our overall economy forward? Reports say it’s not.

According to the Bureau of Labor Statistics, the Leisure & Hospitality, Construction and Professional Services industries led the market in job growth in May 2016. Tried-and-true professions – e.g. lawyers, accountants, architects, etc. – are the real drivers in keeping Chicago diversified and thriving. These facts, however, are not receiving the same attention as tech to keep the commercial real estate industry fully informed.

Landlords across Chicago are investing in these tech companies, providing incentives such as tenant improvement dollars, rent abatement and leasing commissions, in the hopes they will turn into long-term commitments. Like banks, though, landlords can’t lend on ideas over a tenant’s actual ability to pay. We need to continue to support our tech scene while remembering which leasees prove to be the smartest investments.

The Beginning of the End for Co-Working Spaces

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Co-working spaces have been grabbing square footage in cities across the world over the past several years, fighting over who gets to house the influx of innovative startups and budding entrepreneurs. It appears that this market has hit oversaturation, and even the biggest names in co-working are starting to pull back.

WeWork cut forecasts earlier this year, and the CEO has pronounced an end to the company’s “spending culture.” Even though WeWork says its profits are stronger than ever, it’s hard to imagine how long that will last.

The community atmosphere offered by operators like WeWork is undeniably appealing, but it’s no longer a novelty. Traditional companies across Chicago are remodeling their offices to embrace a collaborative spirit and recruit young, creative talent. This, combined with a notoriously difficult business model, most likely signals the beginning of the end for co-working spaces.

Sublease Available in the Civic Opera Building


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Sublease available through March 2019 in the famous Civic Opera Building, 20 N. Wacker. Versatile space comes fully furnished with access to a kitchenette.


  • 1,772 RSF
  • Sublease available through March 31, 2019
  • $32 Gross
  • Open area with 2 work stations
  • Conference room
  • 2 private offices
  • Fully furnished
  • Kitchenette

Interested? Contact Bill Himmelstein at

Tenant Advisory Group, Office Sublease, Civic OperaTenant Advisory Group, Office Sublease, Civic OperaTenant Advisory Group, Chicago Sublease

Lease Office Space in Vibrant River North Tech Community


Lease office space on the second and/or third floors of a quiet building at 744 N. Wells. Located in River North, this opportunity also comes with access to VentureShot networking events.


      • Steps from the Chicago Brown Line
      • 2nd floor: 2,530 RSF, 4 oversized offices, 3 large offices, 1 conference room
      • 3rd floor: 1 large office, 2 small offices, 1 large conference room
      • Access to VentureShot (ground floor tenant) events
      • Rent by the office for $500 – $2,500/mo

Interested? Contact Bill Himmelstein at

Tenant Advisory Group, 733 N Wells, Lease, Lobby

Tenant Advisory Group, 744 N Wells, LeaseAbout 744 N Wells

744 North Wells in River North is in the heart of Chicago, making it the perfect location for many businesses to call home. Venture Shot, a startup aimed at helping other startups, brings a community feel to the building with numerous events that help businesses grow revenue, scale and get funding or investments. With the seamless blend of private offices, amenities and conference rooms, this space provides a unique combination of networking opportunities, community and hard-working businesses.


Furnished/Unfurnished Spaces
All Expenses Included
Concierge Services from Managed by Q
Free Wi-Fi
24/7 Access
Wheelchair Friendly
Quiet, Private Offices
Flex Space
Free Scheduled Use of Conference Room
Free Access to VentureShot Events
Great Networking Opportunities
Within One Block of Brown Line
Walking Distance to Michigan Ave.
Across the Street from YOLK
Bike Rack on Wells St.
On-Premise Car Parking Available
Free Coffee and Water
Weekly Cleaning Service
Full Kitchen
Air Conditioning

Do you Qualify for Rent Abatement?

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Commercial leasing agreements commonly extend up to 10 years – or  longer – making negotiations key to long-term savings for your business. One of the greatest opportunities to reduce your monthly cost is rent abatement, or free rent. As you begin the discussion with a Lessor, it is important to understand what rent abatement is and how it can be used to your advantage.

Do You Qualify for Rent Abatement?

Unless there are extenuating circumstances at play, rent abatement is a provision best considered during new or renewal lease negotiations. This is when the Lessee has the most leverage, especially if a business has already shown itself to be an ideal tenant at the current or a previous property.

Why Would a Landlord Provide Free Rent?

If you are a new business needing time to get up and running, or even an established business faced with moving costs and possibly contributing funds to a buildout of your space, the Landlord should understand that you will need some time to build cash reserves back up before the payment of rent commences. If the Tenant is providing the Landlord a large cash security deposit, this is great leverage to negotiate more months of abatement. Furthermore, the cost of acquiring valuable tenants – tenants that take care of the space and pay rent on time – is not insignificant to the Landlord. Leasing commissions, background checks and potential lost rent due to time the space would sit on the market are just a few factors they need to take into consideration when faced with negotiating leasing terms. Potential or current tenants can position rent abatement as a concession that benefits both parties.

How Can You Have this Added to My Lease?

Many business owners don’t realize rent abatement is an option, so simply knowing about and presenting this as an option during negotiations is half the battle. When entering into a discussion with a landlord, present this incentive as one of several the Lessor can provide to reach a mutually beneficial outcome. All negotiations are a give-and-take, and ultimately the Landlord needs to know they will not be losing money in the process. Rent abatement is one of the key terms that can be negotiated, along with tenant improvement dollars and rental rate, in order for both the Tenant and the Landlord to feel they’ve achieved a mutually beneficial deal.

For more of Tenant Advisory Group’s expert tips for negotiating your commercial lease, click here.

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