Marcos Alvarado, president and chief investment officer at Safehold Inc. (NYSE: SAFE), participated in a video interview at Nareit’s REITworld: 2019 Annual Conference in Los Angeles.
Alvarado said Safehold has continued to prosper with its strategy focused exclusively on ground leases.
Ric Campo, chairman and CEO of Camden Property Trust (NYSE: CPT), participated in a video interview at Nareit’s REITworld: 2019 Annual Conference in Los Angeles.
Campo said Camden expects that supply is going to peak in most of its markets in 2020 and then start declining after 2021. “The great news is that we’ve had enough demand to take up the supply,” he said.
Whether you’re a tenant or a landlord, signing a commercial lease is a huge task. As such, you need to understand what you’re committing yourself to before putting pen to paper.
Landlords want to maximize the return on their assets. After all, that’s the business they’re in. However, as a tenant, you may want to enlist the services of a real estate lawyer to double-check your lease.
While this can protect you from a legal standpoint, it’s also worth remembering that a legally acceptable agreement can still be a bad business deal.
Here are the main things you should research before signing a commercial lease:
1. The Basics
When you’re looking for a new property, it’s important to investigate those features that don’t usually appear on the lease.
For example, you may want to analyze the local area to evaluate whether it’s a fit for your business. You should also look into the zoning laws to make sure your business is allowed to operate in that area.
Also, find out more about the landlord and building owner. Sometimes, these may be the same person. Either way, you’re entering a business partnership with these individual(s) and should research their financial situation and credit history.
2. The Space
Commercial properties are priced per square foot of space. However, make sure you clarify what space your landlord will charge you for. Otherwise, you could end up paying more than you expect.
This is where you need to understand some industry jargon. Your lease may mention rentable square feet (RSF), the total amount of space a tenant can lease from the landlord, or perhaps usable square feet (USF). This may include useless spaces, such as walls, elevators, and stairways.
Try to figure out what your landlord defines as rentable space as this may change from one individual to another. Many landlords use a loss factor to calculate the rentable space where, for example, they determine how big a space is and just inflate that number by a certain percentage.
You could ask an architect to measure the space and check that the usable area matches the needs of your business. If your (or your architect’s) calculations fall short of what the landlord claims to be the usable space, you could have room to negotiate the lease.
3. Operating Expenses
Your landlord may include an operating expense clause in the lease. This lets them recover the costs of running a building.
This section is often the most complicated part of a lease to understand. Ask for a premise definition of all the items that are included in the operating expenses. Then, make sure you check that these operating expenses correspond to the benefits you gain under the lease.
During your research, you may want to ask:
- What are the CAM terms? Most leases include the term CAM (Common Area Maintenance). This fee is based on the percentage of the building you’re renting. It is charged to cover any repairs or maintenance to the building’s common areas.
- Are you responsible for capital expenditures? These typically refer to any major structural expenditures where, for example, the foundations, roof, or HVAC may need work.
4. Increasing Costs
Tenants are generally responsible for any increase in building expenses and real estate taxes over some base point. This can get expensive. So, make sure you understand the ins-and-outs of any escalation formulas.
Also, most real estate taxes are the legal responsibility of the landlords, but you may be liable to pay for these if specified in the lease. Check for any real estate tax or similar clauses.
5. Changing Circumstances
If you sell your business sometime in the future, you may want someone else to take over your lease. This is known as an assignment and you may find yourself needing to assign your lease to get out of it in the future. However, your landlord may have the right to terminate your lease if you ask for an assignment. So, make sure you check if the lease is assignable.
Similar to an assignment, see if you can offer a sublease under the terms of your lease. This let another business work in your space under your lease terms. You simply pay the lease while the other party pays you a proportion of the cost.
6. Dispute Resolution
Watch out. Some leases may include a clause that states you must pay for any disputes where the landlord is taken to court.
So, check if your lease has a mandatory arbitration clause. These clauses state that both parties must settle any disputes through arbitration rather than going to court. If you do have an arbitration clause, check to make sure you have the right to help select the arbitrator and participate in other decisions during an arbitration.
Before signing a commercial lease…
Remember that no lease is set in stone. If you do your research and work with your landlord or (if needed) a legal attorney, you may be able to negotiate more favorable terms.
And if you don’t understand any aspect of your lease, don’t sign it. Make sure you get the proper professional advice.
By: 365 Business
Changing times call for changing work environment spaces. Not everyone has the same job or the same work style. Switching things up in the workplace can help refresh your work mind, making you more productive. A traditional cubicle approach can be better for your individual work ethic or an open space for your creative style. On the other hand, while the benefits of working in an office seem evident, your work style might be more in tune with a non-traditional office space. Here is how different work styles may determine the best types of office space for you.
Detail-Oriented — Cubicles
Isolated working spaces—such as the traditional cubicles—are especially useful for detail-oriented people. In-depth concentration is more likely when you are alone. People who excel in catching details thrive in this solitude work environment. Providing privacy will eliminate distractions leading to further productivity. Cubicles form an optimal way of creating multiple work areas in a larger space.
A cubicle allows you to claim your own space in the office. Storage in cubicles makes for your important documents and files to be stored away neatly. Wall space in cubicles serves as an idea board to post diagrams, schedules, and other notes. Personalizing your cubicle or individual work area gives you freedom of expression, and some may work more comfortably in a space they don’t have to share with others. Additionally, the fact that everyone gets the same amount of space creates an atmosphere of equality.
Data-Oriented — Remote Work
Whether you’re investing in stocks or working in accounting, working with data goes well with a remote workstyle since most of the time they’re in front of a computer. Working outdoors or from the comfort of your couch at home can relieve tension when crunching numbers. Data-oriented people do the best when they’re able to choose where and when to work.
Working remotely also results in a better work-life balance. Data-oriented workers focus on numbers and don’t need to collaborate as much with others. Crunching numbers can be tedious individual work. Outdoor environments relieve stress and make it more comfortable for those who surround themselves with numbers on a daily basis. Working remotely is the best option in their case, as they can do their job undisturbed and utilize technology to communicate back to the office.
Collaboration-Oriented — Open Space
No companies are the same, but the open space approach is the most adaptable. Having assigned seating in a big open room without cubicles can create a sense of accountability. When everyone can see how and what you’re doing, you’re bound to show more motivation. Open space layouts have a high degree of interaction and inspire collaboration.
Eliminating the hierarchical tradition of seating executives and managers away from the rank and file can also work wonders for team morale. Integrating employees with higher up executives communicates that everyone is equal, with no special treatment for anyone up the ladder. The traditional corner office and cubicle arrangement is an office model of the past for the emotionally-oriented worker. Keeping the office space flexible also allows you to move around based on projects you’re working on with different team members.
Creatively-Oriented — Community Space
People who enjoy working in a creative environment require an interactive setting. Having the ability to bounce ideas off each other and collaborate on projects is essential for them. Such occupations include strategy developers, property owners, and artists. Creative working people require a space where different opinions can come together to move projects along.
Unlike most who don’t do well in spaces with office chatter and find noise distracting, this group thrives in constant communication. Problem-solving and decision making can be made easier when team members are in constant contact. As community spaces have surfaced to serve innovative companies, this space does not advocate for the traditional work environment. As such, you can put your creative mind to work by immersing yourself in a space that appreciates open dialogue.
It’s clear that knowing your work style is helpful in choosing the best work setting for yourself. Far too often, work environments are imposed on workers without keeping their work style in mind. Motivate yourself in a new way by choosing a work environment best suited for you.
REIT returns were lower in November, although on a year-to-date basis the sector continues to post a solid performance, market watchers said.
The total returns of the FTSE Nareit All REITs Index fell 1.4% in November, while the S&P 500 gained 3.6% during the same period. For the year to Nov. 29, the FTSE Nareit All REITs Index was 27.1% higher, while the S&P 500 was 27.6% higher over the same period.
The total returns of the FTSE Nareit mREIT Index gained 1.5% last month, while the yield on the 10-year Treasury gained 0.1%.
Jennifer Francis, president and COO of Senior Housing Properties Trust (Nasdaq: SNH), participated in a video interview at Nareit’s REITworld: 2019 Annual Conference in Los Angeles.
Francis discussed the headway that Senior Housing Properties Trust has made with its disposition strategy. She noted that the REIT identified $900 million in assets for disposal, in an effort to reduce leverage. “We’ve made great progress,” she said, with just over $700 million of assets either sold, under agreement to sell, or with offers received.