Tenants as well as landlords will find IREM's latest expense analysis report helpful. Used as benchmark this analysis demonstrates clearly if you as a tenant or as a landlord are on par with national general building expenses.
For more information tenants should contact a licensed commercial real estate tenant rep in his/her area.
Since 1994 I have been representing Buyers/Tenants. My focused specialty is solely driven to advocate for Tenants and Buyers of Commercial Real Estate. My services include Tenant Rep, leasing and purchasing negotiations of all types-renewals, relocations, renegotiations, terminations and Real Estate Investment acquisitions/dispositions on a local, regional, national and international basis through a network of RE/MAX Commercial offices around the world.
The lease that you and your landlord sign defines your legal relationship. Your lease will be one of the most important legal documents you will ever have.
What does the lease do?
It contractually binds you to the terms. More specifically:The lease is a contract in which: You agree to pay rent for a certain period of time. You agree to abide by other conditions. Your landlord agrees to let your business occupy the space for a set amount of time. Your landlord may agree to physically alter the space to fit your business
Usually the Commercial Tenantwill start the search for a space.
Typically, a business owner starts the process by spotting a space available in a desirable area. Instead of seeking the advice of a Tenant Rep. the business owner contacts the leasing broker listed on the property. Unfortunately, many business owners do not realize that the listing agent has a fiduciary responsibility to represent the landlord.
The landlord process.
Typically, you'll be working with a lease form that's been written by the landlord’s agent or the landlord's lawyer. You can be sure that neither one of them will be looking out for your best legal interests. In order to avoid being raked over the coals, you need to retain your own Tenant Rep. to learn about the terms of the lease.
There are no standard leases.
Contrary to what a landlord may have you believe, there is no such thing as a state promulgated "standard" commercial lease. Any commercial lease can be modified. An experienced Tenant Rep. will help negotiate the best terms for you and not the landlord. He/she is trained to find comparable properties and provide you with an analysis of rent cost in your area. Your Tenant Rep.’s knowledge of lease clauses and the market will determine the success of the lease negotiation. The landlord is only limited to make concession subject to his current ender and insurance obligations.
Your lawyer will help decipher the meaning of lease clauses.
Leases are full of legalese. Lawyers often dress up lease clauses in dense legal verbiage or burden them with mile-long sentences. Your Tenant rep. will recommend real estate attorneys in your area experienced in lease negotiations.
DUAL REPRESENTATION BROKERAGE IS THE REAL ESTATE BROKERAGE INDUSTRY’S “800 pound gorilla”
Dual agency occurs when one commercial real estate company represents both the tenant and the landlord in a lease transaction. Sometimes it is one individual on both sides. Other times it is two individuals within the same firm.
When you, the tenant, use a dual agency, there’s an 800 lb. gorilla in the room that you should not ignore. Questioning where the agency’s or individual’s loyalties truly lie is an obvious issue. Is it with you the business owner or with the landlord?
Conflict of Interests
Every year tens of thousands of businesses are misled by brokers whose true loyalty is to the landlord. This costly mistake translates to higher rent, more overhead and less profits. Many tenants negotiating a lease for office space, retail space or industrial space and ignore the 800 lb. gorilla. They don’t talk about how a major component of their future is affected by people whose loyalties lie across the negotiating table—the dual rep broker and his true client, the landlord. The commercial real estate market has traditionally tried to hide this dirty little secret. But a growing group of tenants is realizing that in the world of big commercial brokerage firms, the landlord always wins.
The landlord’s goals and objectives clearly conflict with the tenant’s. Landlords are in the business of leasing and operating office
buildings. They know every trick in the book and are very experienced. And their conduits are the landlord’s brokers and agents. A broker who has a listing on a building also has a fiduciary responsibility and contractual obligation to the landlord - not to you. How can that broker fairly and adequately also represent the tenant? The answer is that the broker can’t, no matter how much marketing spin they might use to justify it. An unsuspecting tenant doesn’t stand a chance when standing alone against a dual-agency broker and his landlord.
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