Posts Tagged 'Landlord'



Sleeping with the Enemy Broker

For those companies who prefer not to formally engage real estate service providers because they choose not to sign representation agreements, answer me this:

“Do you enjoy sleeping with the enemy?”

That’s right! The commercial real estate broker with whom you are working, the one who presents properties to you, the one to whom you have disclosed important information about your company, the one who says he’ll keep your information confidential, the guy who said he’d get you the best deal…is the enemy!  He has a legal, binding, fiduciary obligation to disclose everything about you, your company, and its real estate needs to property owners, including your confidential information. He is compelled to negotiate against you on behalf of property owners, to get you to pay as high a price as possible, and to get you to agree to terms that would be more favorable to property owners.

That’s right! The law of agency requires that, absent a written agreement to the contrary, a real estate broker is the agent of, and must protect the interests of, the entity from whom he or she receives compensation. Since, in most commercial real estate transactions, broker commissions are paid by landlords, without a written agreement between you and the broker stating that the broker represents you even though he’ll be paid by the landlord, you’re out of luck!

Surprised? You shouldn’t be.  Don’t take my word for this.  Ask any attorney how this really works.

But, deals are done this way all the time….right? So, why change things now?  Formally engaging a real estate professional to represent a company in acquiring real estate is not a new concept.  In fact, most commercial real estate transactions nowadays include both a landlord representative and a separate tenant representative, where the tenant representative has been formally engaged by the tenant through a written agreement.

Don’t landlords sign representation agreements with real estate brokers?  Doesn’t your company sign other agreements and contracts, such as leases, purchase agreements, service plans, employment agreements, vendor contracts, and others?

So, why not hire a real professional and protect your company’s interests?  Perhaps you don’t trust your broker or would not want to be bound to him.  That’s an easy one!  Find the right broker…and, hire him by a written agreement that protects your company’s interests.

Then, you and your company will be protected, and you will be assured that you won’t be sleeping with the enemy!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

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Mr. Landlord: When You Convince All of Your Other Service Providers to Reimburse You…Call Me!

If you’ve read any of my writings over the last few years, my positions are clear about the silliness that some die-hard commercial landlords still play when it comes to paying commissions that are due real estate brokers. Most landlords are very professional, appreciate the efforts put forth by commercial real estate brokers, and gratefully pay their compensation in-full and on time.  But, there still exists this small, decreasing group of curmudgeon-like landlords, who think it is their right to treat brokers unreasonably and unfairly. Their days, like their ability to realize great success, are numbered.

One of my all-time favorites is how many in this dying little group of commercial landlords think that real estate brokers are the guarantors of tenant creditworthiness, and that commissions paid to brokers should be conditioned and contingent on tenants performing their lease obligations. Some of these knuckleheads even think brokers should reimburse landlords when tenants default. The answer to this is really simple.  Commercial brokers:

* Are not credit analysts, and cannot provide you with any more details than you can obtain on your own

* Cannot guarantee tenant performance any more than they can guarantee landlord performance

* Deliver tenants to landlords, landlords to tenants, and negotiate transactions

* Have completed their job when the lease is executed

* Are protected by the laws of most states, which say that commissions on lease transactions are earned when the documents are executed, not over time or based on anyone’s performance

Despite the above facts, some landlords unfairly seek to shift their business risk to commercial real estate brokers, by claiming that the commissions due those brokers should either not be paid or reimbursed to the landlord, if a tenant defaults in the performance of its lease obligations.

To those landlords, I offer a simple response:

When you stop payments to, and / or receive reimbursements from ALL of your accountants, advisors, architects, attorneys, builders, cleaning companies, consultants, contractors, cost estimators, expeditors, delivery companies, drywall installers, electricians, elevator companies, engineers, environmental service providers, financial advisors, fire safety technicians, HVAC installers, insurance brokers, landscapers, lenders, masonry contractors, maintenance companies, management company, mortgage brokers, paving contractors, plumbers, roofers, security contractors, steel erectors, subcontractors, suppliers, tax advisors, trash haulers, truck drivers, utility companies, vendors, window suppliers, YOURSELF, and everyone else involved in your transactions in any way…AND, you advise me BEFORE we engage in any discussions that you will unfairly attempt to shift your business risk to me and to everyone else…only then, would I possibly consider doing business with you!

And, after you inform all of the above about your new payment policies, let me know how much longer you actually expect to be in business.  Frankly, when I explain your approach to my client…the tenant…there’s a very good chance they won’t want to do business with you, either!

So, let’s avoid this ridiculous conversation.  You bear what is rightfully your risk, the tenant will bear its risk, and we’ll bear ours, so we can all focus our energies on the real reason we’re engaged in a dialogue…creating a transaction between you and our tenant!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

9 Defensive Strategies When Your Building is in Serious Financial Trouble

So, what happens if you uncover bad news and find out that your company’s landlord isn’t just managing cash flow but, may truly be in danger of losing its building…..the building YOUR COMPANY OCCUPIES?!

Here are 9 Defensive Strategies When Your Landlord May Lose The Building Your Company Leases, that might stave off catastrophe:

1. Buy the building from the landlord (This one may be challenging if your company is a small tenant in a large building)

2. Buy the building’s mortgage from the lender

3. Sublease your space (This strategy may be least effective if the building is experiencing financial hardship, especially in markets with little demand for space)

4. Restructure your lease (Can your company create enough of a financial benefit for itself and its landlord to save the building? What would be the quid pro quo?)

5. Seek self-help (Which services, on which the landlord may default, can your company perform or have performed by other service providers, without placing itself into default of its lease?)

6. Check with your real estate professional (What’s the word on the street?)

7. Check with your attorney (What legal remedies might be available to your company?)

8. If your lease is scheduled to expire, move now….move early (The double rent that your company might pay for a short time period, if it moves to other quarters before its lease expires, may be cheap in comparison to the expenses, lost productivity, and other challenges it might experience if the landlord loses its building)

9. Have a conversation with your landlord to determine what you might work out together
In tumultuous economic times such as these, prudence demands that executives be proactive in understanding the stability and risk associated with the real estate their companies occupy.  Advanced planning and a little investigative work, coupled with creative solutions can go a long way to protecting your company’s flank.

 

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

33 Signs That the Building Your Company Leases May Be In Serious Financial Trouble

As your company seeks to reduce costs and preserve its cash, it is important to keep a careful eye on those other companies that provide services to you that can have a material affect on your ability to conduct business productively, safely, and profitably. Specifically, your company’s landlord could be experiencing financial or other challenges that, if unresolved appropriately, could hinder your company’s ability to enjoy a productive business environment, irrespective of your continued rental payments.

Watch for a number of issues that could signal your landlord is having difficulties, or may be headed for them. They could be signs that your landlord may be in danger of losing its building. While this list is not intended to be complete, some indicators may include:

1. Significant increases in vacancy in your building

2. Increases in vacancy in other buildings where your landlord has an ownership interest

3. Increases in vacancy in neighboring competitive buildings

4. Construction projects that start at your building but, languish unfinished for extended time periods (typically a sign that contractors are not being paid on time or at all)

5. Decline in response time and / or communications for service, maintenance, or repairs (a sign that staff has been cut or is stretched too thin)

6. Increase in equipment and system breakdowns, such as elevators, HVAC systems, etc. (indicates a decline in preventative maintenance, staff cuts, or more)

7. Fewer landlord or management company employees visible on site

8. Decline in security, life and property safety services

9. Consistent lack of consumable items in restrooms and other areas

10. Interior office, common area, or window cleaning occurs less often

11. Trash not disposed of in a timely manner or is stored in basements and other areas

12. Snow not removed from parking lots in a timely manner

13. Landscaping not updated or maintained and / or grass is cut less often

14. General deterioration of the appearance of the building, parking lots, and grounds

15. Reduction of tenant events

16. Deferred capital improvements

17. Preventative maintenance announced or planned but, not implemented

18. Floors, glass, and metal and other interior components not polished or maintained

19. Band-aid repairs being made in place of needed capital replacements

20. Unresolved mechanics liens from contractors and other service providers

21. Real estate taxes delayed or not paid

22. Mortgage payments delayed or not paid

23. Water, utility, or other payments delayed or not paid

24. Increase in unresolved or unpaid fines from the municipality and / or other governmental authorities

25. Substantial and / or unexplained increases in operating expenses and costs of landlord or management company provided services passed on to tenants

26. Landlord making multiple requests for you to sign estoppel certificates or lease summaries (suggests that the landlord may be scrambling for financing or attempting to sell the building)

27. Real estate brokers unwilling to show your building to prospective tenants (suggests that landlord is unable or unwilling to pay commissions – typically a sign of a cash crunch)

28. Contractors seeking payment from you instead of landlord (indicates a lack of confidence on the part of contractors in their ability to be paid on time, in full, or at all)

29. Contractors unwilling to work in your building (see above)

30. Multiple switching of leasing and / or managing agents, building managers, cleaning companies, security services, vendors, service providers

31. Landlord selling other assets

32. Landlord’s inability to sell or refinance your building

33. Change in landlord’s leasing program – agreeing to many short term leases to small, transient, and / or undesirable companies

What can you do to protect your company and assure that your environment remains productive, safe, and profitable, and that your company receives the services to which it is entitled?

Imagine planning and executing a well designed defensive operational and financial strategy, only to find out that the real estate your company leases may not be under your control and that the space may be pulled out from under you!  That’s right!  Your landlord may not be as good at pruning expenses and could lose your building, throwing into question your company’s rights to remain in its space.

“But, we have a lease with many years remaining;  We pay rent and have never been late!  They can’t take our space away from us….can they?”

The answer to that question is a resounding…..”That depends!”  It depends on a number of factors, from whether or not your landlord will really lose its building, to who will end up with it, to what the process will be if the landlord does lose the building, to how thorough your company’s lease was negotiated in the first place and what protections that document affords you.

The first step is to read your company’s lease. Check all of the clauses that might impact your occupancy, including those pertaining to non-disturbance, landlord default, self-help, sublease, early termination, and others. Since your lease constitutes the rules of engagement, be certain to understand your company’s rights, privileges, and obligations, in the event of a serious landlord problem.

Make it your business to understand all lease components that could affect your company’s ability to remain in the building if the landlord were unable to support it financially. Specifically, does your lease provide for self-help (the ability to secure services that the landlord fails to provide) in the event that the landlord defaults in providing services to you? Can you contract for temporary cleaning and other services? Can you secure utilities directly from the utility provider? Can you do the above without putting your company into default of its lease?

What if the landlord actually goes bankrupt and ownership of the building reverts to the lender? Can the lender terminate your lease? Maybe! Does your lease require the landlord to secure a non-disturbance agreement for you from the lender? Has the landlord provided you with that document? A non-disturbance agreement, if written properly, will most often prevent a successor, like a lender, from terminating your lease.

By now, you’re likely asking: “Why would a lender terminate our lease? Wouldn’t they prefer to retain rent paying tenants?”

That, too, depends! It is possible that your building could have a greater value or a greater likelihood of being sold if it were vacant. Perhaps a larger tenant, or one that for some reason is more desirable, may want your space. Or, maybe your company’s use of its space is not conducive to the lender’s future plans for the building. Without a non-disturbance agreement, your company could receive notice to vacate and have little choice.

When commercial landlords experience financial difficulties, the tell tale signs may be easy to spot. In many cases, payments to vendors, service providers, taxing authorities, and others become delayed or are sometimes not paid at all. In others, the building shows signs of neglect.

If you believe you have reason to be concerned, do a little detective work. Check with the local property tax dept, utility companies, and other building services providers to confirm that bills are being paid in-full and on-time. Ask around, too. Are vendors, commercial real estate brokers, contractors, and others being paid in-full and on-time? But, be careful here. You wouldn’t want to spook anyone and create concern about your landlord if problems don’t exist.

Above, we discussed 33 Signs That the Building Your Company Leases May Be In Serious Financial Trouble.  Guess what?  There are more than 33 signs!  Take a look around your building and ask yourself some of these questions:

34. Has building management or maintenance staff been cut?

35. Is the landlord any less responsive?

36. Are capital projects being delayed?

37. Is construction languishing in an incomplete state for extended periods?

38. Are repairs taking too long to complete?

39. Does the building look as good as it did?

40. Are the interior and exterior common areas being well maintained?

41. Is the landscaping being properly maintained, trash being removed and parking areas being plowed of snow promptly?

42. Are vacancies growing?

43. Are smaller, less desirable, and / or transient tenants taking space?

44. Has the landlord tried unsuccessfully to sell or refinance the building?

These are common indicators that a building and / or its landlord may be in serious financial trouble.  So, how bad could it get? What could happen if your landlord DOES lose your building to its lender…..or, to the sheriff for non-payment of property taxes?  It could get ugly…very ugly, with your company’s productive becoming the victim.

Do your homework…early and thoroughly!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

11 Important Steps to Achieving Commercial Brokerage Success in 2011

Happy New Year!  It’s time to make your business resolutions for 2011.

Here are my recommendations to better serve your clients’ needs and to achieve your own realistic success in the coming year:

1. Determine which client types best fit your expertise and service offerings, and then focus the majority of your efforts on those sectors

2. Develop a business-centric approach to advising your clients and delivering real estate services

3. Customize your service model to one that achieves your target clients’ business objectives, while satisfying their real estate needs

4. Develop an approach to serving your clients that is transparent in all you do, with “Honesty is Our Only Policy!” as your motto

5. Make conflict-of-interest identification and resolution an integral part of your service offering

6. Be crystal clear in your compensation expectations to minimize confusion, especially if yours is a performance and risk based commission model

7. Always put the needs of your client first, without fail, so long as your client recognizes that you are entitled to fair, reasonable, and timely compensation

8. Resolve to agree to no compensation bonuses, but accept no discounts

9. Recognize that, as a service provider, you have your own business risks, and that your role does not include discounting, delaying, or risking your performance based compensation as a means of guaranteeing the creditworthiness or performance of either tenant or landlord

10. Negotiate on your clients’ behalf like you and your client don’t need any particular deal, that you have multiple alternatives, and that you’ll always walk away in the absence of a favorable, but reasonable transaction

11. Recognize that as a service provider and advisor, your only role is to protect your clients’ and satisfy their needs first, that your job is to maintain relationships that your clients permit you to have with them, and that without sustainable relationships with great clients you will not achieve your own success objectives, those of your company, or those of your clients.

Are there more important steps to take to achieve commercial brokerage success in 2011?  Let me know.

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Change is Good!

Ah, birthdays!  GlobeSt.com is 10 this year!  And, what changes GlobeSt.com has seen across so many facets of commercial real estate in those 10 years.

In that short time, many changes have taken place in the tenant representation and corporate advisory business that will likely have a permanent impact on how transactions are done…one way or another.

Creditworthiness

For as long as I can remember, it has been a common practice for commercial landlords to demand proof of financial worthiness from prospective tenants before finalizing any transaction.  Based on available information, landlords calculated risk and set rents, terms, and security deposit requirements, and decided if they chose to do business with tenants on the basis of the financial strength of those tenants. Landlords were clearly in the driver seat.  Oh, how times have changed!

Now, tenants demand and most often receive proof of landlords’ financial worth.  And, with such prominent fear by tenants that in the current economy, landlords could lose their buildings, in turn causing tenants’ rights to be diminished or lost, more and more tenants now assess landlords’ financial condition prior to engaging in lease transactions with them.

Will the Landlord Be Around in the Future?

It used to be assumed that, despite lengthy contracts, a certain element of professional relationship was always part of any lease transaction.  In many cases, tenants could rely on their landlords for certain elements of their occupancy experiences that were not written into any lease.  But, now the potential for buildings being foreclosed upon is highly increased, and in prior years when markets were hot, buildings were sold and then sold again, often in relatively short time periods.  Even today, in some markets, with prices as low as they’ve been, many buildings are trading hands.

Accordingly, tenants can no longer assume that the landlord with whom they negotiate their lease will be the same one with whom they might negotiate again if, at the expiration of that lease, they seek to renew it. Tenants must negotiate leases with the expectation that another landlord will be in-place, and that little likelihood of a relationship on which they can count, will exist.

Prices Are Low, But…

In the current market cycle, some tenants find themselves faced with an unusual combination of lower rents, but little available landlord funds, and the necessity for tenants to fund their own improvements and transaction costs. With companies seeking to preserve cash, this makes transactions challenging.

No Takers

At the present time, when companies have sought to reduce and contain costs by disposing of surplus assets and by paring down liabilities, commercial tenants see almost no market for sublease space.  In some markets, there exists no price at which such space can be subleased, because there simply exists no demand.

Lease Renegotiations

Lease renegotiation transactions have been around for a long time.  However, they came into vogue in the last three years and became the transaction of choice, as a means of generating opportunity for both landlord (usually by extended lease terms in years) and for tenants (most often including lower occupancy costs, surplus space relinquishment, and improved terms).  It may be true that in the U.S. more leases have been renegotiated and restructured in the last three years than new leases have been completed.  Many in the industry expect lease renegotiations to remain a standard transaction opportunity for both landlords and tenants, even after market conditions come back into balance.

Times, they have changed.  They’ve been both exciting and interesting. Here’s to even more exciting and changes times!

 

 

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

Copyright Real Estate Strategies Corporation 2010.  All Rights Reserved.

###

Dear Mr. Landlord: We Both Know You’d Rather Deal Directly with the Tenant! Part Three

Q&A on Tenant Representation with a Commercial Landlord
Part Three of a Three Part Post

Most commercial landlords understand the role of tenant representation brokers and welcome the benefits they derive when tenant representation brokers properly educate and advise their tenant clients.  However, some landlords, mostly old-school die-hards, continue to maintain very negative views of all things about the tenant representation process.   Some actually get offended by the very idea of a tenant representation broker.   Offended!?  What’s that about?

In a recent Q&A conducted via email with a prominent commercial landlord, I had the opportunity to hold a completely frank and open discussion about his views about tenant representation brokers.  And, while some of the conversation was challenging at times, both of us came away having learned from each other.

I invited the commercial landlord to provide me with his views on tenant representation, tenant representatives, and how he’d prefer to conduct the business of leasing his properties.  The conversation got so good, that it took me three posts to include it all.  Be sure to go back and read Parts One and Two!  Following is Part Three of that dialogue:

Read Part One and Part Two of this three part post.

7. Landlord: I wish tenant representative brokers would….

A) Present complete information on ALL tenant requirements at their first communication with me

RealStrat’s Response: Do you present all of your requirements at your first communication with tenant representatives?  Of course not!  While most tenant  representatives strive to provide complete information, so that landlords can make informed and intelligent decisions, sometimes complete information is unavailable.  In other instances, certain information may be confidential or may change over time as a result of landlord responses, negotiations, or changes in the objectives and needs of tenants.   So, providing ALL information at the first communication, while a preferable approach, may not always be possible.

B) Permit landlords and tenants to negotiate directly

RealStrat’s Response: Depending on many moving parts, including issues of confidentiality, tenant preferences, landlord’s style, and more, permitting direct negotiations may not be beneficial to tenants or to the transaction.

C) Not grandstand

RealStrat’s Response: Absolutely!  Frankly,  no one likes a show off!

D) Make the overall transaction process easier for the landlord

RealStrat’s Response: Unfortunately, while no one should intentionally make a transaction unnecessarily challenging, the demands made to the tenant representative by its client may have the unintentional result of creating challenges for the landlord.  And, since the tenant representative’s job is protect the interests of the tenant, making things easier for the landlord may not be on the tenant’s agenda.

E) Communicate thoroughly, more often, and in greater detail

RealStrat’s Response: A tenant representative should absolutely communicate effectively to landlords, especially when asking that landlord to be responsive and expend time and resources in an effort to complete a transaction.  However, in protecting their tenant’s interests, tenant representatives may not be able to communicate in a manner always preferred by landlords.

F) Hurry the hell up!  Tenant representatives often take too long and drag out the process.  Either make a deal with me or let me move on to a real prospect!

RealStrat’s Response: You’re certainly right about that!  Sometimes, transactions feel like they take forever.  But, in many instances, tenant representatives and their tenants must contend with changing business tides and the resulting impact on the tenant’s real estate requirements.  Additionally, based on how you and other landlords negotiate, the outcome of the transaction, and the tenant’s preferences as to where and how it will make a deal, in many cases, is not known until closer to the end of the negotiation process.

G) No longer exist (I had to! Just kidding)

RealStrat’s Response: Ha! Ha!  Landlords, tenants, and tenant representatives maintain a peculiar set of relationships.  Tenants and tenant representatives each have the kind of relationship with landlords that makes them dependent opponents.   Even with their bumps and potholes, the relationships work, and they result in profits and success for all involved.  As the world changes, so will the roles and relationships of these three parties.  Tenant representatives, the direct value they create for their tenant clients, along with the indirect value landlords derive from their presence, will likely be around for a long time.

Mr.  Landlord, thanks for being open about your beliefs and your concerns, and for being a good sport about this sensitive topic.  I hope that my replies helped you as much as your comments helped me.

Read Part One and Part Two of this three part post.


About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com.   Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

Copyright Real Estate Strategies Corporation 2010.  All Rights Reserved.

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THIS WORK IS DESIGNED TO PROVIDE PRACTICAL AND USEFUL INFORMATION ON THE SUBJECT MATTER COVERED AND REPRESENTS THE OPINION OF THE AUTHOR. HOWEVER, IT IS PROVIDED WITH THE UNDERSTANDING THAT THE AUTHOR IS NOT ENGAGED IN RENDERING LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE TO THE READER. IF LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. THE AUTHOR SPECIFICALLY AND EXPRESSLY DISCLAIMS ANY LIABILITY THAT MAY BE INCURRED AS A RESULT OF THE USE OR APPLICATION OF THE INFORMATION THAT IS CONTAINED IN THIS WORK.
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