The
Tenant Representation Process has become increasingly complex and time consuming requiring many steps to deliver
the optimal solution in a changing market. Tenants must think strategically to manage the risks inherent in a commercial
real estate transaction and this necessitates reliance upon the information and advice of a trusted real estate professional.
Some basic steps include:
Lease Abstract –
Review and summarize key business and legal issues in the existing lease(s) to fully understand the rights and the obligations
of the parties when setting goals and creating a strategy to achieve those goals.
Invoice Review – Review
landlord's invoicing to determine if the billing is appropriate. Review could uncover improper or erroneous charges but
is not intended to serve as an accountant's audit. Figures will serve as the basis for a financial analysis and projection
of the existing obligation and the impact the obligation may have upon a new transaction; either renewal or relocation.
Financial Analysis & Projection
- Create a pre-tax picture of the Cost of Occupancy based upon basic rent, electricity, real estate tax and other
escalations, commercial occupancy tax and other related costs. This analysis and projection will help to determine what
impact the remaining obligation will have on renewal or relocation and will serve as a comparison to alternatives being considered.
Strategic Planning – Achieve
a consensus on objectives and determine the optimal timing to engage the market. If timing is right, develop schedule for
the Transaction Management Process and begin selection process to create a team of core consultants including architect, engineer,
construction consultant, telecommunications advisor and experienced office leasing attorney.
Financial, Operating and Qualitative Goals - Meet with
decision makers to establish preliminary financial, operating and qualitative goals. Goals are adjusted throughout the transaction
management process.
Market Analysis – Create
a market report and analysis for the target market area that includes offering facts on a range of select properties
including vacancies and current asking rentals. Inspect properties and create a “short list” of viable alternatives.
The Pro-Active Tenant – Users of
leased property commonly experience changes in needs during the term of a lease; the need to grow, shrink,
reduce the cost of occupancy, the layout, to secure an early renewal or relocate to a more appropriate location. Typically
tenants assume that they are unable to address these issues because there is a remaining lease term. However,
information and advice of a real estate professional could place such goals within reach. Further, the real estate professional
will strive to deliver flexibility in a new transaction to address change and manage risk.
.
A pro–active approach by the tenant is the first step in the tenant representation
process. Seek and secure an experienced, intelligent and energetic real estate professional to advise and assist. Allow
ample time to manage the entire process without undue pressue on negotiations and decision making.
