Don’t Be Afraid to Ask


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Having the most knowledge and information is a huge key to any negotiation. Simply asking is one of the most effective ways of acquiring vital information.

In most negotiations, it is rare one is asked for what they want in a deal. It is also rare for someone to get what they wish for without having asked for it first.

If a client asks a question to the landlord or leasing agent, the client will have undoubtedly gained more than they started with. Even if the client does not acquire exactly what they desired, the client has accomplished more simply by asking.

In most cases, it isn’t easy for the client to even know what to ask the landlord or how to ask the right questions.

A good broker that represents his/her client’ best interests knows what to ask for and how to get it.

For example, I had a client who was outgrowing his space but was still 2 years out from their lease expiration. He thought, “Oh well; I’m stuck until this lease is up and we can get the right amount space for our business.” He never thought to ask a real estate broker or consultant to give him the necessary information and knowledge regarding his situation. Just because you have a lease does not mean that nothing can be done to change it. We like to have your business drive your real estate needs and not the other way around.

Contrary to what some people believe, it is more than possible to negotiate with a landlord and ask them to put your company in a new space or to restructure your existing lease. Had my client not spoken with me, he would have been stuck in space that did not fit his needs.

No matter what situation or issue your company is dealing with, it is highly recommended and encouraged to ask your trusted advisors for good referrals who they recommend to help you.

Ask your trusted advisors; real estate brokers, attorneys, bankers, or CPAs to help you get the information and knowledge you need to ask the right questions.

 

 

 

When is the Right Time to Negotiate Your Lease?


 

This is a question that has been posed to me hundreds of times in my career. The answer is simple: now! What I mean by that is you should review your lease on a yearly basis. A company’s business should drive its real estate needs, not the other way around. The real estate should support the business. Many people believe that a lease is a fixed liability and that nothing can be done, changed, or improved in your lease until it is a few months from lease expiration. The truth is that a lease is a more fluid document than people think. It can be amended and improved during the term of the lease depending on if you have the right leverage and story to tell your landlord.

The next question I most often receive has to do with an approaching lease expiration. When should we start looking or negotiating for a renewal. The answer is that whether relocating or staying, the time frame is the same. The reason is that to achieve optimal leverage and therefore optimal results in a renewal negotiation, you need to retain the perception that it is possible for your business to relocate. A relocation from site selection, negotiating business terms, negotiating the legal terms of the lease, submitting for permits, and construction can take 12-18 months, assuming the transaction is a priority for the tenant, the landlord, and the brokers.

If you approach the landlord 3-6 months prior to your lease expiration, they can be quite certain you have not spoken to other properties and they will present an offer reflective of the knowledge they are not competing to retain your tenancy. In a lease negotiation, time provides the tenant with leverage. So do competing offers. Therefore, I recommend giving yourself a minimum of 12 months lead time (18 months if you are above 10,000 rsf) to begin researching the market for competitive offers. The earlier you approach your landlord, and especially if you approach them with another offer in hand, the more likely you are to get fair market terms.

 

For more information, please contact bill@tenantadgrp.com

Does Size Matter?


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Yes and No.

In theory, yes:

The larger company”…

  • Has more leverage over the landlord
  • Represents a larger share of the building’s cash flow and profit
  • Gives the building a higher occupancy, allowing them to charge more to other tenants

In addition, the better the reputation a company has, the more other tenants will want to follow them into the same property.

However, in reality, no:

Size shouldn’t matter with the right broker who is truly representing your best interests.

With a smaller company, the similar benefits are possible through a pro-active and strategic approach.

If a company is smaller, it is important to first get hold of a trusted and recommended real estate broker or negotiator who knows the business. The broker will have the experience required to compare prior deals made by larger companies in the building, and most importantly, the broker will care about the client’ best interests and negotiating the best deal possible for all of her client’.

Because the broker has significant information on the matter thus providing the client with the leverage needed, the client will get a result just as good as a large tenant that has an “˜importance in size’.

With a solid broker who has the best experience and knowledge, and who cares about the client, a small company can have the best deal, regardless of size.

Relocation Checklist


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TAG helps to relocate many companies every year saving them time, money, and hassle. Here is a relocation checklist so you can be sure you have everything covered for your next relocation.

____ Have movers come out to premises and do a walk through to determine relocation costs. Give a basic idea of what items need to move, any equipment or funiture that has to be taken down or taken apart in one location and put back together in another location.

____ Schedule time for freight elevators and docks at old and new locations.

 

____ Identify and secure insurance requirements.

 

____ Have phone and data broker arrange for telecom to be set up at new location and canceled at current location.

 

____ Contact furniture vendor to make sure all needs are taken care of.

 

____ Any sensitive items such as bank statements, contracts, invoices, client information etc need to be separated and either filed in another area of the office or if need be shredded.

 

____ Prepare an inventory of everything being moved.

 

____ Prepare change of address- notify post office, prepare business cards and stationary, send move notification to clients and vendors, change periodicals, subscriptions, and bill pays to new address.

 

____ Throw out all materials not essential to be relocated. May need to arrange for additional trash removal, charitable donation pick up, or coordinating off-site storage.

 

____ Communicate clearly with staff and movers so everyone is on the same page with how to prepare and label the belongings and what to expect with the new location.

 

____ Decommission old space. Get rid of unwanted furniture and equipment. Bring space back to what the lease terms specify- broom clean condition is typical.

 

Like anything, you should have a good team around you to help facilitate this process. Your broker should have key contacts in each of these areas that they can introduce. Always be open and honest about questions and concerns you have throughout the process.

When to Use a Broker


 

A couple days ago, I had an interesting conversation with a business owner who was looking to renegotiate his office lease. He told me he is currently working with a business consultant to help him to do this. I thought, Wow! Hold on, a business consultant?

The word “˜consultant’ can easily be misleading and tricky. Consulting is the right motive, but a real estate consultant is the right specialist.

The difference between a business consultant and a real estate can be seen here:

1. Business Consultant 2. Real Estate Consultant
  • Talks directly with Landlord, then client
  • Client first, then talk with Landlord
  • Limited knowledge= no competition, landlord has the advantage
  • More experience and knowledge= more competition, landlord will renegotiate
  • Client owes $ to business consultant
  • Client owe $0, landlord compensates real estate consultant
  • Results but no negotiation or savings
  • Best results and considerable savings

 

The more experience the better: When it comes to dealing with your second largest expense–like an office lease–it is critical to reach out and recruit the person with the most information and skills in negotiating leases.

Example 1. Renegotiating a lease using a business consultant:

The business consultant speaks directly to the landlord and asks what his best offer is. The business consultant then shares this information with the client who then calculates their best offer. The business consultant, who has no outside sources to compare prices of office leases, “negotiates” a price with the landlord. The landlord, aware that the business consultant has no outside information, has the upper hand. On top of this, the business consultant charges the client, who was left with poor results.

Example 2. Renegotiating a lease using a real estate consultant:

Clients first: The real estate consultant first asks the client what their intentions are.

The more information and knowledge, the more skilled the negotiator: The real estate consultant researches other buildings in the area, compares lease prices and shares this with the client.

The client then has the choice and upper hand to renegotiate the lease with the landlord or change offices. The landlord is now aware that he/she has competition and is more willing to seriously renegotiate the lease.

In addition, with a real estate consultant, the client owes nothing! The landlord compensates the broker.

The business consultant may have results but unsatisfying results. If you want the best results, think competition, think high savings, and get a real estate consultant.

Ten Tips to a Successful Negotiation


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TAG completes dozens of successful negotiations every year (over $30,000,000 worth of transactions in the last 2 years!) because we know the market better than anyone else and we understand how to work with others. Here are some tips you can use with your negotiations:

Information: information is the key to any successful negotiation. The more you have, the better position you will be in to achieve your goals.

Leverage: gaining leverage allows you easier access to achieve your goals in the negotiation. Often times, leverage can be found by gathering more information.

Fairness: you never want to take every penny off the table. Leave a little something for your opposition in a good faith showing of being fair. You may end up crossing paths again and you want to be able to pick up where you left off, which is successfully completing a negotiation.

Maintain calm demeanor: it is very important to never raise your voice. The purpose of yelling and screaming is to get someone to listen more closely, but it actually has the opposite effect. If you raise your voice, people will stop listening and progress will be halted.

Understand your adversary’ motivations: by understanding what your opponent’ goals are makes the accomplishing of your goals that much easier. Often times, the two sides might have varying definitions of success, making attainment a far greater possibility.

Understand your motivations: it is important to not lose sight of what you set out to accomplish. Many factors can play a role in working against you like ego, spite, saving face, or revenge. By remembering the purpose of the negotiation it can bring your focus back on what you are seeking to achieve and not wasting time and energy on things that distract you from your purpose.

Never make a threat you are not willing to keep: you will lose tremendous credibility and leverage by not following through on your threats. If you need to make a threat, you have to be willing to act on it should your adversary not comply with your demands.

Listen: this can be a tremendously effective negotiation tool. By asking questions and listening, you can gain great insight as to your challenger’ motivations, you can gain valuable information that will increase your leverage, or you may just learn something personal that you connect over. Either way, we have two ears and one mouth- use them in the same proportion.

Know your BATNA: this is your Best Alternative to No Agreement. Just because you are in negations does not mean you have to accept something that does not make sense. Having an alternative that you can fall back on provides tremendous leverage and ensures you won’t do a deal just to get something done.

Develop trust: everyone always prefers to work with people they can trust. This holds true with people you are negotiating against. It bodes well for future successes and better results in your negotiations.

What’s In Your Lease?


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What’s in your lease and what should you be looking for? While TAG is here to help you fully understand the terms, we believe an educated client is a happy client. Here are a few basics items to look for and be aware of:

Business terms: Double check that the business terms agreed to in Letter of Intent are the same as in the lease document.

Sublease clause: Reasonable consent should not be withheld by landlord. Landlord will ask for 100% of profits. A 50/50 split is fair. Seek to minimize notice to landlord and response time from landlord. Consent shall not be necessary for purchase, sale, or merger.

Hold-over clause: Landlord will ask for 200% of rent. However, 150% is fair and market.

Renewal Clause: Landlord may ask for automatic renewal if no notice. This is not acceptable. It’s nice to have rights to space. Negotiate rate when possible as it will still be negotiable at that time.

Work letter: This should be studied closely to make sure everything matches up to what landlord said he was going to deliver. If there is an allowance, base building items should be taken care of by landlord. If landlord is constructing, make sure he is liable if he doesn’t deliver on time.

Right to Terminate: Can be a great source of leverage to restructure lease regardless of how market has changed since execution.

Surrender of Premises: Space shall be returned in broom clean condition, nothing more. Landlord may ask for space to be returned to white box. That is unacceptable.

Taxes & Operating Expenses: It’s important to make sure capital improvements are not passed along to tenants through operating expenses. If gross lease, should be a Base Year.

Insurance requirement: Have a qualified insurance broker review coverage requirements.

Damage or Destruction by Casualty: Seek to minimize time in which lease can be terminated, and maximize the remedies available to tenant.

Bonus: It’s very important to have an experienced real estate attorney review the legal terms of the lease. Also, it can be a great advantage to have an experienced commercial real estate broker negotiate the business terms of the lease. They are paid by the landlord through a fee that already exists.

2055 W. Army Trail Road in Addison, IL


DescriptionHere’s a unique opportunity to sublease suite 134 (11,046 SF) in a Class B building at 2055 W. Army Trail Road in Addison, IL. The sublease is available now through September, 30 2022. The building is located at the corner of two high-traffic roads, I-355 and Army Trail Road, and it features an office space, warehouse and a showroom with plenty of storage and an onsite management team.

The space is in a class b office and warehouse with a showroom space included. The suite features loading docks with two garage door entrances, ten offices, three conference rooms, four workstations and two small storage rooms.

The building is conveniently located at the four-way interchange of I-355 & Army Trail Rd. with a Pace bus stop adjacent to the park. It has high visibility to I-355 and Army Trail Road (127,716 vehicles per day (VPD) on I-355 and 58,700 VPD on Army Trail Road), and is located near a fitness center, hotels, restaurants and a golf resort. The building is only 22 minutes from O’Hare Airport and 34 minutes from Midway Airport.

The park features a single-story office/flex building with loading available truck dock(s) and drive-in door access. Building signage is available, and there are 517 parking spaces available for the property. The building has a nine foot ceiling height in the office, and twelve foot ceilings in the warehouse.

The individual suite features a tenant-controlled HVAC, 24/7 access, in-suite washrooms, mail, FedEx and UPS services and it is fully sprinklered.

Size: 11,046 SF of space split between a warehouse (831 SF), large storage space (1,231 SF), two training rooms (516 SF and 985 SF) and a showroom (1,598 SF).

Cost : $9/SF

Location: 2055 W. Army Trail Road in Addison, IL 60101

10.5 Acre Property in Elkhorn, Wisconsin


Description: A 10.5 acre property is available for development. The property is 10 minutes from Lake Geneva and Lake Delevan. The nearby area has over 100,000 full-time residents with over 300,000 visitors per year. The adjacent business park has over 4,500 visitors per day, and the traffic count for I43 is 22k per day and for route 67 it is 9k per day. The site will feature a Love’s Travel Center, as well as a Fairfield Marriott hotel with 70 rooms. It is a great opportunity for a restaurant and other retailers to cater to the Marriott and Love’s guests, as well as the industrial park traffic.

Size: 10.5 acres

Location: Elkhorn, Wisconsin. I-43 and South 67.

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