- You are risk-averse and do not want the hassles of being a landlord. LEASE
- Your space needs are fluctuating, and you need mobility. LEASE
- Your company’s credit rating and cash flow prohibits financing. LEASE
- The property may be in an area of declining real estate values. LEASE
- The return on your capital is greater investing in your company. LEASE
- You haven’t found a suitable property to buy. LEASE
- You want control of the property and seek pride of ownership. OWN
- You are purchasing the property below market and it’s a sound investment. OWN
- Your company is stable, profitable and has long-term viability. OWN
- For some businesses, such as certain retail and service businesses, location is all important. OWN
- You are in an area of appreciating land values. OWN
- A purchase brings tax savings and appreciation. OWN
- You have not found a suitable property to lease. OWN
- Lease Transaction: the fee is paid by the Landlord upon execution of the lease agreement.
- Sale Transaction: the fee is paid by the Seller at closing.
- Consulting Engagement: the fee is paid by the Client as negotiated between parties.
We will consider many factors such as the location of your property, the year it was built, the type of property, the size of the property, historical research of the property. We will also consider whether it’s an income producing property, investment property or an owner-occupied property.
- We can utilize 3 different methods to derive value:
- Market Approach: Comparing sale/lease of similar properties to determine the sale price.
- Income Approach: sale of income producing, investment properties utilizing cap rates to determine the sales price.
- Replacement Approach: Uses construction cost of comparable building (how much it would cost to recreate) to determine the sales price.
When buying, selling, renting, or leasing a piece of commercial real estate, there are various risks involved. Your goal should be to minimize these as much as possible. Examples of potential problems that can lead to legal disputes include the following: defects in title, zoning and land use restrictions, overlooked lease notice and default language, ambiguous operating expense definitions, market fluctuations, and environmental contamination.
- The key to mitigating these risks is by taking time to do the following:
- Quantify all user/investor needs and purposes.
- Evaluate the market risk.
- Confirm the building/space is a fit given your objectives or use.
- Distinguish Investment potential, and overall physical (e.g. deferred maintenance), environmental, and regulatory risk.
You can expect Reliant Partners to assist with developing an operating budget, negotiating vendor contracts (best of class vendors and pricing), setting-up utilities and inspecting the property for deferred maintenance and operational inefficiencies. We will proactively address building operation and tenant needs, while retaining quality tenants and increasing a property’s value.
The most common types of commercial property leases are shown below. Each lease type has different requirements for the landlord and tenant.
- Full Service or Gross Lease: The rent is all-inclusive. Tenants can expect the landlord to pay for expenses which are associated with the property (for example, taxes, insurance, and maintenance). Janitorial and utilities services are included in Full-Service leases as well.
- Net Lease: The landlord charges a lower base rent for the commercial space, plus some or all of the “typical” operations or maintenance expenses. Tenant expenses in these leases may include real estate taxes, property insurance, and common area maintenance (CAM).
A letter of intent (LOI) is a written agreement made between tenant and the landlord prior to executing a formal lease agreement. While LOIs may not be legally binding, terms of them can be — for example, non-disclosure and exclusivity agreements. LOIs are meant to protect both parties in the transaction until the transaction is executed.
Tenant improvements (TI) are improvements requested by the user of the property. Depending on the scope of improvements, it may require architectural design, permitting, construction documents (CD’s) and a third-party construction contractor. Who pays for the tenant improvements are negotiable depending on the type of property, market conditions and quality of the broker (that’s where Reliant Partners comes into play).
- 1031 Exchange: A “1031 exchange” is a method of deferring tax on the sale of an interest in real property as allowed under Section 1031 of the Internal Revenue Code. In brief, if the proceeds from the sale were reinvested in a like-kind property, a 1031 exchange would allow a seller to postpone tax on any profits gained from the sale.
- CAM: Common Area Maintenance.
- This refers to 1 of the 3 charges billed to tenants in a triple net lease – also known as NNN. Triple Net (NNN) is the tenant’s share of tax, insurance, and common area maintenance.
- Cap Rate: the ratio of net operating income against the property valuation.
- NOI / Current Market Value is the equation to remember for cap rate calculations.
- Net Operating Income: this is the property’s income after all expenses are taken out.
- Net Absorption: the amount of space occupied over a given point in time while subtracting out vacancies.
- Letter of Intent: think of the LOI as a way to get down details of an agreement before anything is set in stone. After the LOI is agreed upon, those terms are transferred into a lease.
- Submarket: divisions of bigger markets, marked by geographic location
- Triple Net Lease (NNN): A rental rate that does not include the landlord paying operating expenses like insurance, utilities, or taxes.
Hiring a Reliant Partners commercial real estate broker provides an arm’s length intermediary to negotiate on your behalf. Regardless if you are a seller, landlord, buyer, or tenant – we will safeguard your long-term interests, ensure you maximize profit, mitigate potential risk, and save you time.
At Reliant Partners, we have vast knowledge of various property types and market values. With experience not only as a broker, but also a company owner and an investor – we can provide unparalleled negotiation experience. A Reliant Partners broker implements a detailed transaction process, customizes negotiations to fit each client, and provides top of class marketing.