RISMEDIA, July 22, 2008-When corporations decide to buy or lease commercial real estate, there is the misconception that hiring a broker will only increase out-of-pocket expenses. Often corporations do not realize that a savvy, aggressive real estate broker can help analyze and negotiate a deal that saves you money.Lori Brown, president of Brown Real Estate Advisors in Chicago, IL, offers the following checklist of terms that an experienced broker negotiates to set up the competitive environment for a company’s lease to leverage their tenancy and drive costs down.
Termination option: Termination options creates flexibility which is crucial for companies. Termination options allow for a flexible exit strategy or renegotiation of a lease. Landlords usually detest this concession but will provide it if it’s a critical to making the deal.
Lease Expansion Terms: Many tenants believe that expanding a lease is a simple transaction. On the contrary, extracting a market deal on an expansion or renewal of a lease requires more finesse. Landlords often hold tenants lease agreements fixed so the incorporation of lease expansion terms keep tenants in control.
Tenant Improvements Allowance: Many companies may decide to buy or lease a building with the intentions of construction and improvements to the space. Landlords will offer improvement dollars, but it is imperative that tenants have control over where the money is spent. Negotiate to include build-out costs to cover out-of-pockets costs such as technology, phones and wiring or money for rent abatement.
Furniture: If there’s furniture in the space, the landlord may provide it at no cost to the tenant. It costs more to move the furniture out of the space than for a landlord to include the furniture in the lease.
Union Issues: Make sure to investigate if the building is union. If yes, a union building will highly impact costs of future construction and moving so make sure to include union costs in the budget.
You Don’t Pay for the Broker, The Landlord Does: Sometimes corporations question the value added and additional costs of a broker. In reality, the landlord pays the broker’s commission not the tenant. The value of the tenant’s cash flow from the deal is invaluable to the landlord so he/she agrees to pay the commission.
About the author: With over 20 years of experience as a prominent commercial real estate tenant representative, Lori Brown has launched her new woman-owned and led company, Brown Real Estate Advisors. Brown Real Estate Advisors provides real estate brokerage and advisory services to mid-cap companies. For more information, visit www.brownrealestateadvisors.com.
