Articles About Commercial Real Estate

Sample Letter of Intent

Posted by: Garrett K.

Sample Letter of Intent (LOI) or
Memorandum of Understanding (MOI)

Not legally binding but spells out the intent of the legal agreement. This is often a precursor to a lease agreement to minimize legal expense prior to reaching consensus.

Dear {Broker Name}:

We are pleased to submit the following proposal to lease for {Company Name} (Tenant). The general terms
and conditions under which Landlord/Tenant will consider a lease are provided below:


PREMISES:     The premises shall contain approximately 1,700 rentable square feet of space located on
the 2nd Floor of the office building located at 1900 Main Street, San Francisco, California, commonly
known as Suite 200 (the “Premises)

TERM AND
COMMENCEMENT:     The term of the lease will be for approximately Five (5) Years, commencing upon substantial
completion of improvements, estimated to be April 1, 2008.

RENTAL RATE
PREMISES:     The monthly base rent (“the “Monthly Base Rent”) per rentable square foot for the Premises
during the lease term shall be as follows:
Months Rent   
1-12     $3.10

Thereafter on the anniversary of the commencement date the Monthly Base Rent shall increase by three percent (3%).

TENANT
IMPROVEMENTS:     Landlord shall construct the improvements pursuant to the attached space plan prepared by
Interform Architects, entitled “2nd Floor, Suite 200,” and dated January 16, 2008. All improvements to the
Premises shall be constructed using building standard materials.

RIGHT TO TERMINATE:     Tenant shall have a one (1) time right to terminate the lease at the fourth anniversary
of the lease term. Tenant shall provide Landlord no less than six (6) months prior written notice and shall pay
Landlord a termination fee equal to the next six (6) months rent plus the unamortized tenant improvements and
leasing commissions with annual interest at an annual rate of 9%. The termination fee shall be paid at the time
notice is provided to Landlord.   

OPERATING EXPENSES:     The operating expense stop shall be established by using 2008 as the base year. If, during
the Lease Term, Tenant’s proportionate share of taxes and operating expenses for the building exceeds the amount of
operating expenses and taxes for 2008, Tenant shall be responsible for such excess. Operating expenses will be calculated
on a grossed-up basis reflecting variable operating expenses as if the building was 95% occupied. Tenant’s exposure to
this pass through shall be capped at 5% on an annual basis.

SECURITY DEPOSIT:     The amount of the security deposit shall be determined upon Landlord’s review and approval of
Tenant’s financial condition. Please review the two most recent years of audited financial statements attached.

RENEWAL OPTION:    Tenant shall have the right to extend the lease for a period of five (5) years at 95% of Fair Market
Value (FMV). Tenant will have a window to provide notice which will be from nine (9) months to three (3) months before
the lease expiration.

RIGHT OF 
FIRST OFFER:    Tenant shall have the Right of First Offer on any neighboring spaces throughout the term of the lease.   
   
SIGNAGE:     Tenant shall have the right to one building standard directory strip on the building lobby directory
and the 2nd Floor lobby directory.

PARKING:     Tenant shall be entitled to one (1) unreserved parking pass at $200 per stall.

ACCESS:     Tenant shall have access to the Building 24 hours per day, 7 days per week.

PROPOSAL EXPIRATION:     This proposal is valid until February 4, 2008 at 5:00 p.m.

This proposal is not intended as, and does not constitute, a binding agreement by any party, nor an agreement by
any party to enter into a binding agreement, but is merely intended to specify some of the proposed terms and
conditions of the transaction contemplated herein. Neither party may claim any legal rights against the other by
reason of the signing of this letter or by taking any action in reliance thereon. Each party hereto fully understands
that no party shall have any legal obligations to the other, or with respect to the proposed transaction, unless and
until all of the terms and conditions of the proposed transaction have been negotiated, agreed to by all parties and
set forth in a definitive agreement which has been signed and delivered by all parties. The only legal obligations,
which any party shall have, shall be those contained in such signed and delivered definitive agreement referred to above.

If you have any questions please do not hesitate to call me. If the terms provided herein are acceptable to you, please
acknowledge your approval in the space provided below and prepare a lease for our review.

Sincerely,

Reviewed and Approved:

Last updated: 09.15.2008 10:25 AM

How to Negotiate a Lower Rent

Posted by: Alan Bernier

3 Ways to Negotiate Lower Rent

Besides claiming that you are a young, growing, and cash strapped business that the landlord should
help at the goodness of his heart, here are a few methods that can help.

1. Fair Market Value: The first one was to discuss the other spaces you are looking at using the
real financial terms with the broker and or the landlord. Once they realize you might go elsewhere,
they usually will attempt to cut to the chase and put their best foot forward.

2. Pay as you Grow: The next technique is to attempt to phase your growth into the space. For example
if the space is 2,500 square feet, you begin with the justification that you need 1,500 square feet now,
but will need the 2,500 square feet a year from now. If you are signing a 3-5 year lease, the landlord
should be willing to let you pay as you go which will strongly help the economics of what you are trying
to accomplish. Below is a real example to see the power of this type of negotiating:

Direct Approach   
Space    2,000 square feet
Rent    $2.00 per square foot/month
Calculation    $4,000 per month*36 month term
Total Obligation    $144,000


Phased Approach    Paying on 1500 square feet for 6 months before moving to full 2,000 square feet
Space    2,000 square feet
Rent    $2.00 per square foot/month
Calculation    1500*$2/sqft*6months+2000*$2/sqft*30months
Total Obligation    $138,000

This is an average rent over the term of $1.91 and is probably an easier method then asking the landlord
to cut their rental rate $.10.

3. All the Extras: Negotiate the rent as far as the landlord will move and then move to concessions like free
rent or tenant improvements.
 

Last updated: 09.15.2008 10:04 AM

Move in Checklist

Posted by: Alan Bernier

Move in Checklist

The process could take 18 months or 2 weeks. The search process and completed lease should be completed 30 days
prior to the move date. Below is your game plan for the last 30 days:

Countdown Begins:

Days 30-14

•    Make sure the necessary improvements do not need a permit from the local city building permit office.
    These timeframe can be 1 day to 6 weeks. Ask when you tour if any desired improvements will trigger the need for
    a permit and if so how long the current waiting period is.
•    Finalize the lease document with help from a legal professional
•    Call chosen internet provider to set up installation appointment. The lead time can be up to 4 weeks, so
    please call as soon as you identify your new address
•    Select moving company
•    Select wiring company
•    Call furniture vendor to begin dialogue on options for furniture


Days 14- Move In

•    Call stationary provider
•    Update business license
•    Prepare to update website
•    Prepare to update phone messages
•    Revise insurance policy (you will have to do this as part of the lease). If you don’t have a business
    insurance policy, it should take less then a week to process finding an insurance broker and getting a policy
•    Figure out what equipment is no longer needed at current location and donate to charity or sell to
    equipment broker
•    Notify bank for printing of new checks
•    Call Phone company for installation of new phone lines if needed

Last updated: 09.15.2008 09:45 AM

Easy Ways to Green your Office

Posted by: Garrett K.

This article can be found at http://www.urbansolutionssf.org/green/simple_steps.html but we liked it so much we thought we would post it here as well.  These are great things to consider for your current office location or if you're searching for a new commercial real estate space.

Simple Steps to Green Your Business

There are many ways to green your business. Here are some ideas to get you started:

1. Reduce, reuse, recycle and compost your waste. Reduce waste by purchasing products with less packaging

and using resources as efficiently as possible. Not sure what can be recycled and composted? Check out our

Blue and Green Bins List. Use the EcoFinder tool to find out where to recycle items such as appliances

and electronics.

2. Purchase goods that are made of recycled materials and that are reusable, compostable, or recyclable

whenever possible.

3. Use energy efficient light bulbs such as compact fluorescents. To find out more about lighting, visit Energy

Star – Lighting.

4. Make sure the lights, AC and heating, faucets and all other equipment are turned off when not in use. To help,

 install sensors and programmable thermostats, or post reminders such as “switch off” and “conserve water” by light

switches, printers and copiers, and other equipment.

5. Shop local, and shop green. Purchasing from local merchants, vendors, farms and manufacturers supports your local

economy while reducing environmental damage from long-distance transport. Buying sustainably-made supplies including

office supplies, building material, fabrics, and food products helps the environment and improves labor conditions for

the people involved in producing the items. Before buying a product, check if it is organic, locally-made, and if not

local then fair-trade certified. If you don’t know, ask!

6. Use organic, biodegradable cleaning products instead of toxic ones.

7. Purchase energy efficient appliances with Energy Star certifications. Get rebates for your energy-efficient appliances

 from PG&E.

8. Conserve water by:

    - Purchasing cost-effective low-flow toilets.

    - Placing a heavy object such as a brick into your toilet tank.

    - Installing inexpensive faucet aerators, or ordering a free one from the SFPUC.

    - Not leaving the water running while washing dishes.

9. Reduce unwanted mail by contacting the sender and removing your name. Find out more at the Bay Area Junk Mail Reduction Campaign and Green Dimes.

10. Serve water and give take-out materials only upon request, and use compostable take-out materials[PDF].

11. Print and copy double-sided whenever possible. Keep a stack of used paper for printing on the other side. View

a preview of documents before printing them to avoid re-printing.

12. Promote less-polluting modes of transportation. Encourage employees to bike, walk and take public transportation

to work through incentives and support, such as setting up bike racks in your office, offering Commuter Checks and

participating in Spare the Air and Bike to Work Day.

13. Perform regular maintenance on your HVAC (heating, ventilation and air conditioning) system.

14. Use latex- or water-based paints, finishes and varnishes rather than oil-based paints. Buy paints that have zero or

low VOC (volatile organic compounds).

15. Form a Green Team in your organization consisting of a few concerned individuals who will take the lead in initiating

environmental change.

Last updated: 09.09.2008 02:16 PM

Greening Your Business

Posted by: Garrett K.

This article from the San Francisco Chronicle gave a great overview of how to take the first steps in Greening your business. Hope you enjoy it!

Leah Oblinger had managed the San Francisco office of Barkley Court Reporters for two years when, in 2006,
she decided to turn it green.

Oblinger convinced her bosses to switch to recycled paper for the 10 million sheets they use each year.
When the landlord wouldn't pay for new, low-flow toilets, she had the company buy them. She arranged for
the firm's computers to be put on timers, so they turn off automatically at 7 p.m.

"Once I found out we had environmental alternatives, everyone got so excited by it," Oblinger said.

Barkley Court Reporters - with eight employees and 200 court reporters on contract through its San Francisco
office - is among a growing number of small businesses that are trying to become greener and more environmentally
sensitive. These aren't just classic eco-focused businesses like organic food producers or solar power companies.
They include everything from neighborhood delis and hardware stores to auto mechanics, law firms, bookkeepers and
dentists.

The Bay Area is at the forefront of this trend, thanks in part to a green business certification program coordinated
 by the Association of Bay Area Governments. One of the few such programs in the country, it has enrolled more than
1,300 small- and midsize businesses since its start in 1996.

In San Francisco alone, applications rose from 136 businesses in 2006 to 312 in 2007. Other counties are seeing
double-digit increases in applications, and cities such as Oakland and Berkeley now have long waiting lists of
businesses seeking green certification.

The green certification program helps companies figure out what steps to take, and how to do so affordably.

But the initial impetus always comes from within the business - from owners or employees who made it their mission
to find greener ways of doing things.

Weighing the trash

Joubin Pakpour, founder of Pakpour Engineering in Pleasanton, is an avid skier who became worried several years ago
that global warming would damage the slopes and watershed of his beloved Sierra.

So he set about calculating the carbon footprint of his six-person company - even to the point of weighing how much
garbage was generated each day.

Pakpour bought flatware for the office to cut the use of disposable plastic forks and spoons. He offered commuter
checks to subsidize employees' use of mass transit, and encouraged his staff to turn the lights off and run the
dishwasher only when full. He also started routinely printing documents on both sides of the paper, which helped
lower paper use from 534 pounds in 2005 to 465 pounds in 2006.

He is also trying to spread the word among other businesses with which he works.

"We use a lot of subcontractors and we've pushed this on them slowly, asking them to present us with a recycling
plan for their office," he said.

Wendel Rosen, an Oakland law firm with 133 employees, decided to examine its own environmental footprint in 2003 when
it created a practice group catering to green businesses.

"An office isn't the first thing you think of with environmental impacts," said Donald Simon, the partner who headed
up the firm's green efforts. "But when we checked under the hood, we saw that an office like ours has significant
environmental impacts."

Simon found that his firm's biggest impact was its use of paper - 5 million sheets each year. "One thing lawyers do
is go through a lot of trees," he said.

Wendel Rosen had already been using paper with 35 percent post-consumer recycled content, meaning that 35 percent
of the pulp came from paper that was used and recycled by consumers.

So the firm shifted to 100 percent post-consumer content, which ended up saving the equivalent of 260 trees, 24,000
gallons of water, and enough electricity to power 3.5 homes each year.

"People think that recycled paper won't work, that it will jam their copiers," Simon said. "We didn't have any problems
with it."

Many small steps

Unlike giant corporations, small businesses don't have the resources to devote entire departments to environmental
improvement.

The things they can do are typically not large dramatic gestures, but a series of small, almost trivial-sounding steps
- a dentist choosing organic cotton bibs for patients rather than disposable ones, a gift shop owner reusing the
Styrofoam peanuts that cushion her incoming merchandise.

Although there is often an initial cost to going greener, many small-business owners say it's less than they expected.
Investing in energy-efficient technology can pay off over time in lower utility bills. And steps like printing on both
sides of the paper can also save money.

"Our recycled paper is slightly more expensive, but we are saving so much money on refillable toner cartridges that it
has balanced out," said Barkley's Oblinger.

Beyond cost, there are other less-obvious challenges that face small businesses trying to go green.

One is simply finding the time to investigate environmentally friendly alternatives.

Another is getting employees to buy into green changes.

Rick Karp, owner of Cole Hardware in San Francisco, has set up programs to collect customers' used paint, batteries and
fluorescent lights for recycling. But some employees were less than thrilled with these added responsibilities, which
don't bring the stores any income.

"It takes a while for the staff to learn to smile and say, 'We kept 50 gallons of paint out of the garbage, that's good
news,' " Karp said. "It's not in their job descriptions, frankly. You're a salesperson in a hardware store and here you
are dealing with buckets and buckets of used paint, or batteries, or fluorescent lightbulbs."

Most small businesses rent their facilities rather than own them - which can make it hard to switch to energy-efficient
ventilation or lighting systems.

And small retailers face an additional unique set of challenges - stocking products that meet their environmental values,
while keeping customers happy. Unlike a Wal-Mart, small retailers don't usually have the clout to force vendors to
reformulate products or alter packaging.

Jen Komaromi, who owns an El Cerrito gift store called Jenny K, has occasionally discontinued a product due to the
manufacturer's excessive packaging. "If I can't influence their packaging decisions, I won't carry them," she said.

Cole Hardware promotes only its greener cleaning and gardening products. But it also stocks conventional, toxic products.

"We are a hardware store, and people come to a hardware store with expectations they can get certain kinds of products,
" Karp said. "If you want to come in for Malathion (a toxic pesticide), we are going to have it because we know people
want it. ... But we do try to emphasize the less toxic."

Ripple effect

Many Bay Area small businesses that have gone green say the rewards have not only been a sense of doing something good,
but employee and customer enthusiasm.

Mechanics Bank, which received green certification for 14 of its 31 branches, said it has gotten about 50 new business
customers due to its environmental initiatives.

"When our Walnut Creek and Berkeley branches put the (green business) sticker up on their door, they immediately had
some small-business owners come to them and say, 'We're looking for someone green,' " said Rauly Butler, senior vice
president of retail banking for Mechanics.

Some firms are also having a ripple effect on other businesses in their community or industry.

Oblinger first got the idea of greening Barkley Court Reporters from reading about Wendel Rosen's environmental efforts.
She in turn has influenced other companies - obtaining recycling bins for all the tenants in her office building, and
convincing her janitorial contractor to use less toxic cleaning products.

"The janitor liked the products so much, he's now using them in his other buildings," she said.

No clear finish line

Most small businesses that have gone green admit that there's no clear finish line to the process - there's always more
they can do.

Some business owners like Pakpour would like to see different tiers of green certification, to recognize firms that take
a more ambitious approach.

And certainly, there is a difference between green measures that affect the edges of a business and those that redefine
the core of the business itself.

For instance, West Advertising - an Alameda advertising agency that is a certified green business - has taken a variety
of environmental steps such as shifting all its printing orders to recycled paper. Yet its main clients remain automobile
dealers, and its goal continues to be persuading people to buy more cars.

"We are in a business characterized by consumption, and we are talking conservation," owner Pete Halberstedt
acknowledged.

At Barkley Court Reporters, Oblinger is waiting for a day when she won't need to buy even recycled paper because the
legal system will have shifted to electronic transcripts.

Barkley recently started giving clients the option of buying paperless transcripts, while offering to plant a tree for
every such transcript purchased.

Last year they sold 52. In the first four months of 2008, they've already sold 34.

"It was slow going at first, but people are starting to catch on this year," Oblinger said. "We're trying to make
clients aware of how much paper they are using."
Small moves by small businesses to go green create momentum

THE MORTGAGE BROKER

Like many other service businesses, the biggest environmental impact of CMG Mortgage Services in San Ramon was its paper
consumption. Most lenders required paper copies of loan documents. And CMG received hundreds of pages of rate sheets from
banks every day - which got printed but were obsolete by the next business day.

So mortgage broker Jim Simon focused on paper use when he decided to improve CMG's environmental profile. He got the
landlord to provide a recycling bin for mixed paper, as well as cardboard. He switched the firm to recycled paper for
its letterhead and business cards. Perhaps most significantly, he persuaded his colleagues not to print the entire
package of daily rate sheets, but only those pages they needed.

"Seventy percent of our annual office supplies were paper," Simon said. "I was fortunate enough to be a catalyst at a
time when everyone was thinking, 'This doesn't make sense.' "

Of course, not everyone adapts equally well to change. One broker still prints out a ream of rate sheets each day, he
said.

"It drives us all nuts," Simon said.

THE TOY STORE

Stephanie Sala has done a lot to green her Albany toy store, Five Little Monkeys. She installed a low-flow faucet and
toilet, put the bathroom lights on a timer, switched to a hybrid vehicle, and takes the leaves home for composting when
she sweeps the sidewalk in front of the store.

But one of the trickiest challenges for Sala, like other environmentally conscious retailers, is purchasing. She tries
to stock toys made from renewable resources, with a minimum of packaging. But that's not always possible.

"I do sell some plastic toys or toys that have more packaging than just a hang tag," Sala said. "It's a balancing act.
I'll tell vendors, 'I love your product but I hate your packaging.' "

One time a vendor shipped her some very tiny dolls in a huge box filled with Styrofoam peanuts. Sala called up the
company and complained. Later it reduced the packaging.

"I don't know if it was because of me or if it was happening anyway, but I definitely saw a change," she said.

THE BANK

Rauly Butler had tried to get Mechanics Bank's branches to apply for green business certification by offering a cash
incentive of $1,000 to his branch managers. It didn't work.

"There were too many obstacles in the way - people were too busy, or there was inertia," said Butler, who oversees
retail banking for the Richmond firm. "They would get this overwhelming packet and not know where to start."

It took the single-minded focus of a summer intern to get the branches on board. Intern Patrick Shipp spent summer 2007
working one-on-one with each branch, walking managers through the certification checklist and persuading employees to
take steps such as turning off the lights, reusing paper and sweetening their coffee with bulk sugar rather than
individual packets.

The bank also took some big companywide steps, including replacing part of its vehicle fleet with hybrids and installing
software that cut power use at its data center by 40 percent. But the average cost of getting green certification for
14 of its branches was less than $1,000 per branch.

"The hardest thing on my end was to go into offices and convince each employee that their small contribution would have
an impact," Shipp said. "People really like their individual sugar packets - they use exactly two sugar packets for
coffee every morning. But once they realize their actions are important, they get excited."

10 steps to green your small business

Wondering how to make your business more environmentally friendly? Here are some beginning steps that can be taken by
many small businesses:

1. Consider your biggest impacts. Does your business devour paper? Guzzle gas? Use toxic products? Focus on areas where
you will have the most effect.

2. Change the lights. Replace incandescent bulbs with compact fluorescents, or older T-12 fluorescents with energy-efficient
T-5 or T-8 fixtures.

3. Recycle. In addition to providing bins to recycle business materials, allow employees to bring in batteries and
compact fluorescents from home for recycling.

4. Minimize driving. Provide incentives for employees to carpool, bike, take transit or telecommute. Letting people
work from home even one day a week can help.

5. Buy paper with recycled content - at least 30 percent and ideally 100 percent post-consumer content. Bay Area
office supply stores like www.waldecks.com or www.thegreenoffice.com specialize in green products, but even big chains
like Office Depot now carry high-quality recycled paper. For more information on environmentally friendly paper choices, see www.conservatree.org.

6. Look for the federal government's Energy Star label when buying office equipment. For computers and monitors,
there's also a new program called EPEAT that gives bronze, silver and gold rankings to equipment that meets a
variety of environmental criteria. See www.epeat.net for a list of approved models.

7. Turn off lights and computers at night. Make sure the power management settings are activated on your computers,
allowing them to enter "sleep" mode when not in use.

8. Switch to less-toxic cleaning products. The federal government has information on green commercial cleaning products
 at www.ofee.gov/gp/greenjanitorial.html.

9. Cut waste. Buy supplies in bulk rather than small packages; minimize printing and mailing; eliminate nonrecyclable
packaging.

10. Patronize other environmentally conscious businesses. You can find a list of Bay Area certified green businesses
at www.greenbiz.ca.gov.

Want more info? You can find information on becoming a certified green business at www.greenbiz.ca.gov. Some local
utilities and government agencies also offer rebates for becoming more energy efficient.

- Ilana DeBare

See www.sfenergywatch.org, www.rightlights.org, or www.fypower.com/com/sbs.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/06/08/BUTV10QASV.DTL

Last updated: 09.09.2008 02:15 PM