leasing & real estate planning final - amazon s3 … · to a particular need (leasing space),...

Leasing & Real Estate Planning

SCORE St. Paul Workshop Presentation

5/9/2018

overview & goals• have a better idea of

when it’s time to move your business

• know how to get started with your search for space

• understand the resources available

• understand what will be asked of you to secure space so you are best prepared

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leaving the nest • outgrown your space

• space is no longer practical

• unable to grow your business or fulfill orders

• no longer works for friends or family

• adding staff


search preparation

• business name• type of business• company/business description• business plan w/projections

• 3-5 year sales forecast• start-up expenses and capital

information• 3 years/business tax filings• 3 years/personal tax filings

• insurance• personal guarantee• security deposit $ • 2-3 months rent $• tenant improvement (TI)$


tenant improvement (allowance)

The most common way for landlords and tenants to allocate the expense of improving commercial space is for the landlord to give you what's known as a tenant improvement allowance, or “TIA” or “TA” for short. The TIA represents the amount of money that the landlord is willing to spend on your improvements.


Leasehold improvements, also known as tenant improvements (TI), are the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant

personal guarantee

A “personal guaranty” of a lease is a promise from a “guarantor” (typically, the owner of the business) that in the event of a breach of the lease, the guarantor will make good on the tenant's promises. For example, if the tenant fails to make rent, the landlord can sue the guarantor to collect the rent.

why would a landlord ask for a personal guarantee?

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when should i start looking ?

• financially prepared• prep work completed• minimum 3 - 6 months before lease

start/move-in date


diy or agent?

agency benefits

• trained and educated • consultants• market knowledge• off market listings• association and listing memberships• agency relationships• cost


tenant representation

The logic behind tenant representation is that in order to reach an equitable solution to a particular need (leasing space), the business/ tenant needs access to market information, transaction expertise and negotiation skills equal to that of the landlord who utilizes professional representation.


Tenant representation is exactly what it sounds like. It is a type of commercial real estate brokerage where an agent focuses solely on the needs of a tenant, rather than being tied to the lessor or landlord. Tenant reps are the leasing industry's equivalent to a buyer's broker on the sale side of the industry.

Tenant representation commissions are paid by Landlord/Sellers.

what does a tenant broker do & what is the process?

• full consultation• help decide if you should relocate, renew and/or expand• help decide what type of space and best location(s)• lease or purchase• find space• arrange property tours• secure space – request for proposal (rfp) or letter of intent (loi)• negotiate terms, pricing, exclusives, incentives, TI’s, etc.• lease review and cleanup• assist with space planning• assist with resources – business plan, lender, city programs,

attorney, etc. • representation agreement


interviewing the agent

ü why do you like doing tenant representationü what percentage of your business is tenant representationü have you worked with a start-upü are you familiar with my type of business? ü why do you want to represent meü what do you know about my companyü what can I expect from you if you represent me


?’s an agent may ask

ü search prep items ü how long have you been in businessü what type of business do you ownü how many people will be using the spaceü what areas are you considering/what areas

won’t you considerü what type of space are you looking forü what type of layout do you wantü what is your monthly budgetü parking ü amenitiesü dock/drive-in doorsü power requirementsü signageü other wants/needs/desires


space types

incubatorcoworking

flex space x 2executive offices

office – a, b or c buildingindustrial

retailspecialty – bar/restaurant, motel


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A business incubator is a company that helps new and startup companies to develop by providing services such as management training or office space. Business incubators differ from research and technology parks in their dedication to startup and early-stage companies

Coworking is a style of work that involves a shared workplace, often an office, and independent activity. Unlike in a typical office, those coworking are usually not employed by the same organization.

incubator & coworking

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Flex space is a term commonly used to describe industrial space. You start with warehouse space, that is not air conditioned and add office or showroom space that is air conditioned. You can “flex” into larger or smaller air conditioned spaces as you need.

Flex floor/space – space and terms are flexible to grow with business, and often share amenities like conference and break rooms.

flex 1 & 2

osborn370.comspacesworks.com/minneapolis/north-loop

lease types & terms

standard


short term

gross leasenet lease

3-10 years

6-24 months

or

size & biz type matters

relet &

sublease

Gross Lease: The tenant pays a set sum or “gross” amount for rent and the landlord pays all real estate expenses.

Single net lease requires the tenant to pay only the property taxes in addition to rent.

Double net lease, the tenant pays the property taxes and insurance premiums.

A triple net lease (or "nnn" lease) is a form of real-estate lease agreement where the tenant or lessee is responsible for the ongoing expenses of the property, including real estate taxes, building insurance, and maintenance, in addition to paying the rent and utilities.

Common Area Maintenance charges, or CAM for short, are one of the net charges billed to tenants in a commercial triple net (NNN) lease, and are paid by tenants to the landlord of a commercial property


net vs. gross

how do i calculate commercial rent?


gross lease example

1,000 square foot (sf) @$10.00 per square foot (psf) 1,000 X $10.00 = $10,000 yearly for rent

monthly - $10,000/12months = $833

w/or w/out utilities?

net lease example

1,000sf space base rent - $10.00sfcam - $5.00sftaxes – $2.00sf

$17.00 x 1,000 = $17,000 yearly/$1,417 monthly

utilities!

resources & considerations


• city and or county programs/resources• SCORE, NDC, WomenVenture• lenders• attorney• insurance agent• zoning , licenses, parking

how can i help

• independent agent• multiple years experience working for and with

small businesses/entrepreneurs• specialized in tenant representation, lease

renewal, expansion negotiations and subleasing• communication and process


Tiffany L. [email protected]


leasing & real estate planning final - amazon s3 … · to a particular need (leasing space),...

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