Displaying items by tag: commercial real estate lease
From leasing office space to buying industrial warehouses, the complex terrain of commercial real estate can be confusing and difficult to navigate on your own. Whether you’re buying, selling, or leasing commercial real estate, having an experienced broker working on your behalf is key to avoiding the common pitfalls of the industry. Here’s how to find the best commercial brokers in Denver to ensure you make the best possible decisions for you and your business.
If you own the commercial property in which your business operates, you’re probably familiar with the various opportunities available should you need more liquid capital to maintain current operations, grow, and scale your organization. Simply defined, a sale leaseback offers property owners the opportunity to sell their physical property and simultaneously lease it back from a new commercial real estate investor under a long-term lease without disrupting the business. This is a mutually beneficial transaction for both the business owner and the investor. The business owner gains an immediate working capital infusion into the business from the commercial real estate sale while the investor receives the long-term rental income from the seller-now-tenant. The transaction may sound technically complicated, so if you’re considering this kind of transaction, it’s worth finding an experienced sale leaseback broker to help you navigate the process.
Finding A Qualified Sale Leaseback Broker
The ins and outs of a sale leaseback transaction require diligent attention to detail. There are critical lease details and lease structures (e.g., Absolute NNN; NNN; NN; Modified Gross; Full Service, etc.) that can impact the commercial property valuation when completing a sale leaseback. A sale leaseback broker can provide consultative guidance to ensure those lease details and the most appropriate lease structure are well-received in the eyes of the investment market for a smooth and seamless transaction.
These kinds of brokers can offer tremendous benefits to your sale leaseback transaction. So, how do you find someone who has the understanding and qualifications to provide the support needed for a sale leaseback transaction? We’ve put together a few key characteristics to look for when hiring a commercial real estate expert for your upcoming transaction.
Their Track Record
The first thing that you want to look for when hiring a leaseback broker for your sale is the historic transactions that they’ve executed. Experience is incredibly important in the commercial real estate industry, and it can make a monumental difference in your sale leaseback transaction.
Does the broker have significant experience with, for example, office or industrial lease transactions? Does that same broker also have significant experience with commercial property sales as well as financial analysis? Speak candidly with your broker options about the experience that they have and how they’ve been successful. More importantly, don’t be afraid to ask about transactions that had some bumps in the road and how they handled those challenges.
In an ideal situation, your broker should be able to explain the advantages and disadvantages of a sale leaseback to you as well, to make sure you’re making the right decision. The personal experience of a broker is one of the most valuable assets that they can bring to your sale leaseback transaction. Make sure you take a dive deep into what specifically a broker you’re considering hiring can offer.
Areas Of Expertise
In addition to a history of success, you’ll also want to get familiar with the expertise any given sale leaseback broker may have. It’s not only the type of transactions they’ve executed the most, but also the types of businesses and properties that they work with most often. Each class of commercial property comes with its own attributes, restrictions, and regulations. It’s important that the broker you’re hiring is familiar with the specifics of the type of property you’re selling and any nuances that may go along with that sale.
Resources & Responsiveness
A decade ago, there were often pros and cons to different sized commercial real estate brokerages. As the years have progressed, technology has leveled the playing field by providing equal access to CRE resources and exposure. It’s now more important to determine if the broker that you’re considering for your sale leaseback will dedicate the time, energy and resources necessary throughout your transaction. They shouldn’t just “act” engaged to win your business in the beginning, they need to put in the effort throughout the entire process. Whether you’re looking for strategic marketing to identify and target the right investor or responsive expert consultative guidance to guide you through the process, be sure that the professional you’re considering hiring can provide everything that your business will need.
Your Trusted Sale Leaseback Broker
Your relationship with your commercial real estate broker is of the utmost importance. A commercial real estate transaction is among the highest dollar volume you’ll likely ever experience, so establishing trust with the broker you choose to work with is absolutely essential. When you’re looking for a sale leaseback broker with the expertise and resources you can count on, consider Fountainhead Commercial. Our team is well-versed in the specifics of a sale leaseback transaction and we can effectively support you through each and every step. We’ll leverage our decades of commercial real estate experience to make the most out of your sale leaseback transaction.
If you’re considering a sale leaseback as an option to access capital for the acquisition of a competitor, purchase of critical equipment, or to fund business growth, contact our Certified Commercial Investment Member (CCIM) designated broker today to schedule a consultation.
If you’re a business owner in Denver, you know better than most how high the stakes are for any organization trying to succeed in the 2019 business world. The number of businesses filing with the Secretary of State in Colorado continues to grow year-over-year, with a record total of nearly 121,000 new filings in the 12-month period that ended Q1 of 2018. Since that point, the growth has slowed a bit, but the Denver market continues to surpass other major cities across the country. This means that the success of a small business requires every element of the operation to be at the top of its fame. Even the smallest weakness gives of the 750,000 businesses in Colorado the opportunity to encroach on your territory.
Whether you’re a business owner renting office space in a downtown high-rise or an investor with a handful of strategic properties making up your portfolio, having the right commercial real estate broker on your team is essential to the long-term success of your efforts. Finding the right commercial broker to represent your interests is easier said than done, though; especially if you aren’t entirely sure what specific traits and behaviors will be beneficial to you. There are certain things you want to look for when hiring a commercial real estate broker, so let’s walk through them.
Like all complicated matters, you need countless hours of experience to be a phenom or expert. Commercial real estate lease transactions are no different. I occasionally speak with a tenant or occupier that feels prepared to handle their own commercial real estate transaction. In many cases, this decision maker doesn’t know what they don’t know as they consider forging into the uncharted territory of commercial real estate. Because commercial lease rental payments accounts for 1 of the top 3 expenses most companies face, an uninformed decision can be costly. To prevent wasted time and energy trying to handle a commercial real estate lease transaction without the guidance or support of an expert, you may want to consider what’s at stake prior to moving forward without a tenant broker. When you’re talking about one of your top expenses for your business, it just makes sense to have a experienced tenant broker on your side of the table. Let’s talk about the benefits you can leverage when you have an expert as your advocate.
Who Represents My Business During Commercial Real Estate Lease Transaction?
It is not uncommon for a landlord’s broker to put up a ‘for lease’ marketing sign, tour prospects through the available space, receive proposals, negotiate final deal terms and close the deal. Many tenants are affected by the common misconception that the commercial landlord’s broker has tenant’s best interests in mind when, in reality, the landlord’s broker ONLY represents the best interests of the landlord. Because of this, you want to clearly distinguish the roles of the broker or brokers involved in the transaction to ensure you have a representative advocating for your best interests as the tenant.
Consider this: How often does your commercial lease expire, forcing you to look at competitive offers and/or renew with your current landlord? Traditionally, commercial real estate leases are contracted for periods of three, five, seven, or ten years. If you were to go to court once every 5 years for litigation, would you feel comfortable providing your own legal representation knowing that your opponent, the attorney for the other side, works in the legal field every single day? You can apply the same mindset to a commercial lease real estate transaction. The market has likely changed dramatically since the last time you looked for commercial space and the nuances of the trade have likely not been a priority for you over the last few years. Your tenant broker, on the other hand, has spent the duration of your lease term living, eating, and breathing commercial real estate. If you want to position yourself to sign the best possible deal, entering battle alone probably won’t support that.
Commercial Real Estate - Landlord’s Broker Duties
The landlord’s broker has very specific interests when it comes to a commercial real estate lease transaction - to negotiate the best deal for the property owner. In order to facilitate conversations that offer that opportunity, they can market a property that’s for lease through on-property signs, direct mail, and online. If and when a tenant or occupier contacts landlord’s broker directly as a result of these efforts, it’s critical to understand that disclosure of any confidential or important information (such as lease expiration date, current lease rental rate, rental budget, willingness to provide personal guaranty, etc.) can be used to benefit landlord’s negotiating position. A landlord’s broker has a fiduciary obligation to represent the landlord’s best interest…period. The duty of a landlord’s broker includes working to achieve the highest lease rental rate, lowest tenant improvement allowance, and most favorable deal terms for the landlord.
As a tenant, it’s important to note that just because a broker is performing a task you’d consider to be the responsibility of a tenant representative, such as meeting for a property tour, does not mean that individual is looking out for your best interest. The landlord’s broker can:
- Implement a marketing campaign for vacant lease space(s).
- Tour prospective tenants/occupiers.
- Submit proposals to tenant/tenant’s broker on landlord’s behalf.
- Conduct back-and-forth lease negotiations - proposal to counter-proposal to counter-counter-proposal.
- Arrange space planning services with landlord’s preferred architect.
- Secure the best lease terms and highest rental rate.
The tenant experience, during a commercial real estate lease transaction can set up a business for success, when it’s approached with the right support. Let’s talk about the responsibilities and obligations of a tenant broker.
Commercial Real Estate – Tenant’s Broker Duties
A ‘Tenant Rep’ broker has a fiduciary obligation to represent the tenant or occupier’s best interests during lease negotiations. Aside from the business owner and related stakeholders, a tenant's broker is the only other person in a commercial real estate leasing transaction who is concerned with what is best for your business. Engaging a tenant representative at the very beginning of the process of lease renewal, lease space expansion, or relocation can offer you, as a business owner, a number of benefits that you may not even realize are available to you.
A tenant rep works with you from conception to completion of a commercial real estate lease transaction, offering their insight and expertise for you to leverage. A tenant broker will:
- Lead search for suitable lease spaces for tenant’s potential relocation.
- Provide the tenant a list of commercial space that match their needs.
- Offer expert guidance regarding lease rental rates, landlord’s reputation, tenant improvement allowances, market conditions, building features (both positive and negative) etc.
- Coordinate property tours & help tenant analyze each potential lease option.
- Submit proposals to landlord/landlord’s broker on tenant’s behalf.
- Conduct back-and-forth lease negotiations - proposal to counter-proposal to counter-counter-proposal.
- Negotiate with each ‘short-listed’ landlord to achieve the best lease terms and lowest rental rate.
- Review lease document and provide guidance in coordination with tenant’s real estate attorney.
- Provide guidance regarding efficient use of commercial lease space, construction bids, relocation services, and change-management so employees greet the transition warmly.
All of the above services, as well as the rest of our tenant representation services, are done with expertise and the experience that most business owners simply don’t have because they have been busy focusing on their own businesses for the past 5+ years - not the changes and trends in the commercial real estate market.
Set Yourself Up For The Best Commercial Real Estate Lease Transaction Possible
Similar to a great defense attorney, the tenant’s broker practices their craft all day, every day and has hundreds of lease transactions under their belt. The revered Abraham Lincoln once said, “He who represents himself has a fool for a client.” Trust us when we tell you, a lot has happened in the commercial real estate space since the last time you leased space. Avoid being the fool and get sound guidance from an expert who has had their finger on the pulse of the commercial real estate market for many years.
If you company's commercial real estate lease is approaching expiration within the next 12-18 months and you want to position your business to make the best possible deal, contact our tenant rep broker at Fountainhead Commercial today.