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Commercial Property Questions, Answers | Michigan | Detroit

Read the Frequently Asked Questions below and let us know if you have any further questions!

  1. 1. Why do I need tenant representation?

    For the same reason you would not have one attorney representing both parties in a legal matter.  When so much is at stake financially and legally, you shouldn’t have one broker representing both parties in an office lease transaction.

  2. 2. What’s the most common mistake a tenant makes when negotiating office space?

    The biggest mistake that tenants make is not developing legitimate alternatives to their first choice, whether they are interested in new space or a lease renewal.   We often hear, “I don’t want to move and plan to renew my lease for another term.”  Even if you don’t tell your landlord, he will often draw that conclusion from our actions.  And once the landlord understands this, a tenant loses his negotiating leverage.  Even tenants who have no reason to move must develop alternatives to their current situation.  Otherwise they risk spending money needlessly because they have forfeited all leverage in negotiating the terms of their renewal.

  3. 3. Who is responsible for compensating the tenant representative?

    You don’t spend a penny to use our services.  In most cases, the landlord pays their leasing agent a fee and the leasing agent will share that fee with Tenant Advisors.  In the event you do not have representation, the landlord will pay the entire fee to his leasing agent, but keep in mind where that leasing agent’s loyalties are lie when he represents a property.  His job and fiduciary obligation are to get the best possible terms for you.

  4. 4. We don’t want to move and intend to renew our lease.  Why would we need a tenant representative?

    Landlords hire professional leasing agents to negotiate the highest returns for the investment in their building.  If the agent or landlord can sign tenant at a higher rate, it improves the landlord’s bottom line.

    The key to a successful renewal negotiation is creating competition between your current landlord and surrounding landlords in the area, while maintaining a controlled and organized process.  Tenants need to have an experienced advisor providing the proper market research and negotiating skill that will create leverage for them.  Tenant representatives specialize exclusively in tenant representation and can save you significant amounts of time and money on lease renewals.

    A tenant representative is aware that you don’t want to damage your relationship with the landlord.  That’s why a tenant representative deals with every landlord in an aggressive, yet fair and professional manner.

  5. 5. How much time do I need?

    Market conditions, the size and complexity of the transaction, and option notice dates can help determine when to begin the process of evaluating your lease.  Time should be your ally, not your enemy during negotiations with any landlord.

    Landlords know that other buildings you’re considering will most likely have to create a space plan, get construction pricing, agree on a rental rate, prepare and execute a lease document, apply for construction permits and prepare the space for occupancy.  This is typically a 4 to 6 month process.  So a tenant that waits until there are only six months or less remaining in the lease term before asking the landlord for a lease renewal proposal is basically telling the landlord that it is not considering any other options.

    Depending on the size and complexity of your space requirement, you should allow, at a minimum, the following lead times to negotiate your office lease:

    office size
    1,000-3,000 square feet
    3,000-10,000 square feet
    10,000-20,000 square feet
    Above 20,000 square feet
    lead time
    2-3 months
    2-4 months
    6-12 months
    8-18 months
  6. 6. How much space should I lease?

    The first step in the space leasing process, before you even start looking at space, is to determine the amount of space you will need.  A general rule of thumb is to lease two hundred to two hundred and fifty square feet per person for office space.  However, this amount can vary greatly, and it is important to prepare a space plan program.  Professional space planning services are available at no cost to the tenant.

  7. 7. I want to buy or lease a distressed building, so I can get a better deal.  What pitfalls should I look out for?

    As a potential buyer of distressed assets, your major concern is “due diligence.”  This process of investigating building structure, environmental condition, building mechanicals, roof and parking lot will tell you exactly what areas of the building require major expenditures and “when” the expenditures will likely be needed.  Generally, the most expensive items to fix are roof, parking lot and heating/cooling systems.

    As a potential tenant, you want to know whether the landlord is financially capable of living up to his promises to fix and maintain the building and his ability to perform “tenant improvements” if needed.  If there is some doubt, it is important to have a “self help” clause in your lease so that you can perform these needed repairs and offset against rent owed.

    Another major lease clause is the “non-disturbance” language of the lease.  Can the landlord’s bank remove you as tenant in the event of default or foreclosure.

  8. 8. How do I get started with a real estate advisor?

    Interview the real estate broker you are considering.  Discuss their experience in the type of building (industrial, office, retail) you are looking for, the area (city, county, state) you are targeting and discuss their process.  Are they “transaction” focused or are they willing to consult with you on the entire real estate process from conception, determining size, economic incentives, bidding contracts, etc. through the management of your move.

    Discuss any conflicts of interest your prospective broker may have… determine if the broker represents large landlords or building owners in your target area.

    Once you have completed your broker due diligence, sign a short tenant/buyer representation agreement, which outlines your expectations and services needed as well as your responsibilities to keep the broker updated in changes in your requirements.