The Reason Why Everyone Love Real Estate And Leasing Tips For Emerging Companies | David E Wish

The Reason Why Everyone Love Real Estate And Leasing Tips For Emerging Companies.

David E Wish

SOME BASICS

Permits (recommended) & Zoning (check it)

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IT issues – don’t get stuck with a fax-modem

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Take it for a test drive – try a sublease or shared space arrangement

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Why buy when you can rent

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SUBLEASE: KIND OF LIKE A STARTER HOME •

Good way to get your foot in the door and not pay a lot

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Sublease rates generally are less than direct lease rates

In a soft market, sublease space is available and subleases can lead to direct leases with landlord

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Have to gure out space and service allocation, as well as access

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Do not put any of your $ into sublease space because if your sub-landlord defaults, you are out

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NOT JUST LOCATION, LOCATION, LOCATION

Flexibility, exibility, exibility

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Short initial term with good expansion, renewal and termination options

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Negotiate ability to take on additional space and get out early if you need to

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EXPANSION OPTIONS: LOTS OF WAYS TO STRUCTURE

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Be a good tenant

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Notice of availability of space

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Right of rst refusal

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Right of rst o er

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“Floating” expansion option identi es a certain amount of space in various potential locations within a building

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“Hard” expansion option identi es speci c space at a speci c rate

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RENEWAL OPTIONS:

Don’t get hung up by landlord renewal language re: no defaults

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Setting renewal rent up-front vs. determining it at a later time (kind of like xed v. variable interest rate)

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TERMINATION OPTIONS: •

Try to limit payment to reimbursement of landlord’s unamortized up-front costs (commissions and tenant improvement allowance) over initial term of the lease

PRICING •

Try to get a cap on variable costs in the lease or a gross lease (gross v. net lease)

BUILD-OUT WORK: •

If you are getting work done in the space, try to get the landlord to do it (unless you’re a contractor)

TENANT ALLOWANCES = LANDLORD FINANCING OF IMPROVEMENTS It usually gets paid back by tenant over time as part of base rent

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Depending on market, no free lunch

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GET A BROKER WHO KNOWS THE MARKET: •

Don’t rely on the landlord’s broker (or on your lawyer to work the numbers)

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Start early with a good local broker who knows the market

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Make sure broker has experience for applicable type of space: e.g., o ce, retail, warehouse, medical and/or ex space

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LEGAL ISSUES: •

Clearly drafted lease that identi es each party’s respective maintenance, payment and other obligations

Insurance and indemnity issues in leases are usually the most di cult

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No gotcha clauses that will give landlord undue leverage (e.g. rent acceleration)

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WANT LEED CERTIFIED SPACE? TELL YOUR BROKER!

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LEED building does not necessarily mean cost savings on rent (but there could be other bene ts)

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Di erent types and levels of LEED certi cation

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ASSIGNMENT: •

Make sure it’s broad enough to permit change in control, sale/merger, etc., without landlord’s prior consent

FLEXIBILITY •

Should include parking and operating hours - don’t get jammed on after-hours HVAC

THANK YOU