Articles About Commercial Real Estate
Find information about commercial real estate in our library of Articles, with information on finding, renting and improving office, retail, warehouse, restaurant and other commercial space. If you would like to submit an article, become a Rofo member!
Posted by: Alan Bernier
YOU NEED TO MOVE IN 2 WEEKS! Follow the timeline below for your best chance to keep your co-workers from having to work out of your kitchen!
1. Search Actively: Be very proactive with your search for the ideal space. We suggest both searching
and posting your need on Rofo, as well as making calls to your contacts to make sure all potential commercial real estate spaces come to you.
2. Expand the Search Area: We suggest opening up your search to surrounding neighborhoods to ensure you
find the nicest office. The commercial real estate market is based on timing. Give yourself the best opportunity to find deals that are off the market or are being prepped for listing.
3. Improvements: While looking for space, focus on spaces that will need the absolute minimal improvements
needed for you to move into. Think about improvements that could be made while you were in the space if necessary.
If new paint and carpet is needed, you may have time as long as you aren’t picky on the type of carpet.
4. Furniture and Wiring: Ideally, locate a space that is both furnished and wired and avoid the hassles that come with the long-lead items like furniture, DSL and wiring equipment. If you can’t, schedule your appointment with the phone company with a site to be determined by that date, or give your current address and change it once you have your new location determined.
5. Neighborhoods: Focus on neighborhoods that you are familiar with so you don’t need to spend time educating
yourself on the ideal location within a neighborhood. Ask your coworkers about buildings and neighborhoods they like.
Share your listing ideas with them via Rofo’s Listing email option.
6. Holdover at Current Location: Beg your current landlord to hold over without bearing the cost of increased
rent. Check your lease for the Holdover Rent clause and negotiate with your landlord to avoid it.
7. Moving Companies: Find one with one week remaining to your move in date. Use one of Rofo’s recommended
Movers who have specified quick move ability & feel free to use our name.
Last updated: 04.29.2009 03:04 PM
Posted by: Alan Bernier
25 terms you will likely encounter when going through the commercial real estate leasing process.
1. NNN (Triple Net) Lease: In additon to the monthly rent, the tenant is responsible for paying for their share of property taxes, insurance, common area maintenance, utilities, and janitorial service.
2. Industrial Gross Lease: In addition to the monthly rent, the tenant is responsible for paying for their utilities and janitorial service.
3. Modified Gross Lease: In addition to the monthly rent, the tenant is responsible for janitorial service in their space.
4. Full Service Lease: This is common in most muti-tenant office buildings. In this type of lease all expenses (including utilities and janitorial service) are included in the monthly rent. This is also common for most subleases and shared spaces. However, it is common for the landlord to pass on any annual increases in expenses (as well as annual savings).
5. Rent Escalations: The amount a tenant's rent increases year to year. The most common escalation is based on CPI (Consumer Price Index) or a percentage of annual rent.
6. Tenant Improvements (TI’s): The interior improvements built within the space (premises). Furniture, fixtures and equipment (FF&E) are considered separate from TI's.
7. Amortization: This relates to costs incurred by a Landlord that are passed on to the tenant in the form of additional rent during the term of the lease. This is very common with tenant improvements. The landlord may offer to amortize the cost of improving the space into the tenant's rental payments.
8. Plug and Play: Typically refers to a space that comes with furniture and telco wiring in place. Very common with subleases and shared spaces.
9. Turnkey Build Out: Turnkey tenant improvements are typically provided by the landlord. The landlord and tenant establish the budget. The landlord pays for the improvements and contracts with the builders directly. The costs of the improvements are then included in the monthly rent. This is different from a Tenant Improvement Allowance in which the landlord provides an allowance (loan) to the tenant and the tenant is responsible for the contracts and managing the buildout.
10. Work Letter: The work letter defines the specifications and estimates for tenant improvements (build out) in the space and is usually defined before a lease is signed and attached as an exhibit to the lease.
11. Load Factor: Also known as the Loss Factor, the Load Factor is the percentage difference between the usable square feet of a tenant's space and the rentable square feet. For example, the building lobby and common areas are not part of a tenant's space however a tenant is typically responsible for paying their pro-rata share of these spaces. A tenant's rent is based on the rentable square feet. If a space is 3,000 rentable square feet and the Load Factor is 15%, then the actual space that the tenant occupies (premises) is equal to 2,550 usable square feet.
12. Common Area: The common area is the area of the building that is allocated to each tenant but is not directly
controlled by any one tenant. Some examples include the lobby, elevator, bathrooms, supply closets, and mechanical
rooms.
13. Usable Square Feet: The amount of square feet measured within a tenant’s space.
14. Rentable Square Feet: The amount of square feet that a tenant pays for. It is the usable square feet times the building's load factor.
15. Common Area Maintenance (CAM): Amount charged to tenants for expenses related to the maintain and upkeep of hallways, restrooms, parking lots, landscaping, etc. It is always good to understand what is included in the CAM.
16. Base Year: A Base Year is established in most leases except triple net (NNN) leases. The Base Year (typically the first year) of the lease, establishes the base line for building expenses. The tenant is then typically responsible for paying their pro-rata share of expense increases for each subsequent year. These are typically minor expense increases. It is good to understand the history of a building's expense increases.
17. Holdover Rent: This is the amount of additional rent a tenant must pay if they remain in their space after the lease term expires. Holdover Rent is typically between 150% and 200% of the normal monthly rent and is a negotiable term in the lease.
18. Sublease: Subleasing rights are determined in a lease and is something to consider carefully. These rights establish the rules for renting a tenant's space to a third party (subtenant). This is an important term and one that should be reviewed carefully by a professional (your lawyer or broker).
19. Assignment: This relates to assigning your lease to a 3rd party with the landlord’s consent. This is an important term of the lease because it applies to a tenant's potential merger, acquisition and change of ownership.
20. Non-Disturbance: This relates to a tenant's right to occupy a space without risk of losing the space so long as they are not in default of the lease terms.
21. Right of First Offer (ROFO): A tenant's right to make the first offer on a space to lease or buy. With a ROFO, the Landlord must approach the tenant first with the particular opportunity. The tenant has the right for an established period of time to make an offer.
22. Right of First Refusal (ROFR): A right, usually given by an owner to a tenant, which gives the tenant a first chance to
buy the property or lease a portion of the property if the owner decides to sell or lease. The owner must have a
legitimate offer which the tenant can match or refuse. If the tenant refuses, the property can then be sold or leased
to the offeror.
23. Renewal Option: The right of a tenant to renew (extend the term of) a lease for a stated period of time at a rent
to be determined (i.e. 9.5% of "fair market rent").
24. Relocation Clause: This is any clause in the lease giving the landlord the right to move the tenant during the
lease period.
25. Pro-Rata Share: Percentage of a building that is occupied by the tenant. It is usually based on the rentable or
leasable square footage measurement of your space compared to the rentable or leasable square footage of the building.
Last updated: 04.29.2009 02:51 PM
Posted by: Garrett K.
Searching for a Restaurant Location? Here's some advice:
1. Location, Location, Location: A boring old adage, perhaps, but when you're talking restaurants, nothing is more important. In fact, a poor location is the #1 reason restaurants fail. Walk-in traffic is crucial for eateries, so locating your new venture off the beaten track might save you a few bucks in rent, but could hurt when it comes to attracting diners.
2. Restaurant Improvements: Some say that searching for a restaurant with the necessary kitchen equipment and is worse than searching for a needle in a haystack. Look for restaurants that are currently for sale. Otherwise, begin building in the kitchen improvements into your construction budget. Have a contractor in mind so you can get quick estimates.
3. Permitting: As you tour potential locations, make sure to ask about permitting and current zoning. Venting and stove equipment may be prohibited in certain buildings. Discuss potential restrictions with the owners, brokers, and city employees as soon as possible.
4. Neighborhood: As you walk the neighborhood, take note of competitors and the level of foot traffic. If your past space was occupied by a restaurant, find out why it moved. Ask neighboring restaurant owners for advice and referrals to potential suppliers.
5. Building Expenses: Most retail buildings add in NNN expenses. These include property taxes, insurance, and common area maintenance. Ask the owner for the last few years of building expenses at each potential location. Keep a spreadsheet of all relevant building- related expenses so you can get a true comparison since buildings can have drastically different expenses.
6. Lease Negotiation: Many commercial building owners will attempt to get a percentage of your revenue or even a percentage of the sales price when you sell the business. Have a qualified attorney help you review the lease language and customary terms. A lease is a legally binding document, so know what you're signing!
7. Free Rent: Building out your restaurant can take six months or more. You don’t want to be paying rent for this entire period. It is reasonable and customary for some if not all of this construction process to be rent free.
8. Common Improvement Problems: Bathrooms, venting, and American with Disabilities Act (ADA) are the most common issues with restaurant spaces. Restaurants often need to address one or more of these issues. Monitor the costs closely.
9. Personal Guarantees: If this is your first restaurant, many building owners will ask you to personally guarantee the entire lease value. This is a risky proposition but can't always be avoided. Try to phase the lease guarantee out over the course of the lease. For example, you guarantee the first year or 18 months of the lease but nothing beyond that period.
10. Brokers: Hiring a local real estate expert to help with the search and negotiation process is advisable. Make sure to ask them about their experience working with restaurant clients and in knowing the specific neighborhoods you're interested in.
For more information on leasing restaurant space see the Advice section on www.rofo.com
Last updated: 04.29.2009 02:47 PM
Posted by: Oren J.
Become qualified for California’s Green Business Certification Program. BlueMap will assist your company in preparing the necessary documentation (both internally and externally), and implementing the upgrades necessary to be designated as a California Green Business. This includes the application for designation, managing the scheduling and assessment process, along with the supporting documents to show implementation of green measures.
This includes looking at your company’s:
- Energy Efficiency
- Waste mitigation, recycling and composting
- Water Conservation
- Using less toxic products
- Carbon Footprint
Many of these green implementation measures also lead to immediate cost savings!
California Green Business Program Network includes the following counties/cities: Alameda County, Contra Costa County, Marin County, Monterey Bay Area, Napa County, San Diego Area, San Francisco, San Mateo County, Santa Barbara County, Santa Clara County, Santa Monica, Solano County, Sonoma County
Value of Becoming a Certified Green Business
- Reduces operating costs
- Improves employee productivity and reduces turnover
- Increases marketing opportunities and differentiation
- Increases sales, revenue and market share
- Reduces impact on natural resources
- Minimizes strain on local infrastructure
- Enhances the core values and mission of the company
- Reduced manufacturing expenses
- Reduced water, energy, waste expenses
- Reduced risk and easier financing
How BlueMap Works
When gathering information, BlueMap strives to create the smallest possible interruption to our client's operation. Here is how our process works:
- We begin by conducting an on-site walk through of your facility and operations. This usually takes a few hours. During our walk through, we like to speak with employees in different departments to get an overall feel for your business.
- Once we have identified all your current sustainable practices, we create an internal gap analysis comparing what you are doing versus what needs to be implemented to qualify for being a certified California Green Business.
- Then as our next step, we develop and create an application strategy, identifying appropriate products and services, which need to be implemented. We then use this information to draft the appropriate policy/signs/letters that you will need to post in your place of business.
- Then we schedule a follow-up meeting where we explain these steps, deliver our report, and discuss how we can best help you implement the recommended changes.
- Finally, our team will set up the kickoff inspection by your local green business certification group and you are on your way to becoming a fully certified California Green Business.
Get in touch with us today!
www.BlueMapinc.com
Last updated: 03.26.2009 10:41 AM
© 2008-2024 Rofo.com. All rights reserved.