Blog2019-05-22T12:39:52-05:00

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What Should I Do if I Can’t Pay Rent for My Commercial Space Due to COVID?

We are experiencing unprecedented events that leave most of use worried and confused. Most business owners are being forced to make hard decisions, like laying off staff or temporarily closing their doors. If you rent commercial space, you may be wondering what your options are if your business is facing hardship during the coronavirus pandemic.

You should start by reading your lease to see if you have any options for reduced rent. It’s probably not likely, but you need to know your options.

Talk to your landlord. If you have a real estate broker, have them speak to your landlord on your behalf.  It doesn’t hurt to plead your case. This is an emotionally charged time for everyone and it might make more sense to have a neutral party that isn’t emotionally invested. Landlords are also making difficult choices so keep the conversation civil if you are talking to them directly.

While you may be concerned about your immediate need for rent relief, most landlords are in this for the long haul and will be looking at the big picture. Which means they might be willing to work with you. However, your landlord’s situation will have a direct impact on how much they are willing to helpor not help you.

Even if your business is operating as usual during the COVID-19 pandemic, you should contact your landlord. They may be willing to offer you some concessions, especially if you are getting near the end of your lease term or are coming up on a renewal option. You are also in a very strong position if you need expansion space.

No one has been though something of this magnitude before and we are learning as we go, butgetting some advice from a trusted commercial real estate professional may help ease your mind a bit during this uncertain time.

Brian Smith, CCIM, is the founder of Regent Commercial Real Estate based in Charlotte, North Carolina (Mecklenburg County). He specializes in tenant and landlord representation in North and South Carolina. Please don’t hesitate to contact him with any specific questions you may have.  704.910.9518 or brian@regentcre.com

Does it Make Sense to Move Into a Sublease Space?

Subleasing a space sounds like a great deal, right? Find a furnished space and move-in. Although subleasing a space sounds simple and straightforward, it is not. There are many factors to consider when entering into a sublease. A sublease will contain more paperwork than a standard lease. It will include the sublease, the original lease and addendums, and the landlord’s consentdocument.

You need to be cautious, and having a qualified a commercial real estate broker at your side will immediately give you an advantage. Your sublease is contingent on the sublessor’s original lease and it needs to be thoroughly reviewed by a professional. They have the experience to understand the documents needed for a sublease transaction and can walk you through the process.

There are many reasons a company chooses to sublease their space. They may have downsized and are trying to cut costs by subleasing the space they no longer need, or they could be outgrowing their space and the landlord is not able to accommodate them in their current space. If there is enough term left it would make sense for them to sublease rather than pay earlier termination fees. Either way, you will probably get a below market deal.

Pros

Lower rate – sublessors are motivated to get some cash flow
Shorter term
Less commitment
Most subleases are move-in ready and might contain furniture
Smaller spaces (which is ideal for start-ups or smaller firms who want to control their costs)
If the sublessor is still on-site and you are just leasing a portion of their space you may be able to negotiate shared services (copier, break room, conference rooms)
Monthly costs tend to be a flat fee that covers rent and CAM charges (no unexpected expenses)

Cons

You will be limited by zoning restrictions for the area
Limited or no exterior signage
You probably won’t be able to alter the space
Bad lease deal can be passed onto you. A thorough review of the original lease and the sublease by an attorney can help avoid this.
If sublessor defaults and gets evicted, you may get evicted too. Or the landlord could ask you to pay the full rate the sublessor was paying.
Delays in maintenance. You may not be able to go directly to the landlord-you might have to go through the sublessor. And this could cause delays.

Deciding whether or not to sublease is a big decision and there are many factors to consider.  We can help you navigate through unfamiliar territory.  Contact us today and we can help you get started.

By |March 28th, 2020|Categories: Blog|Comments Off on Does it Make Sense to Move Into a Sublease Space?

Thinking of Selling Your Commercial Property? Now is the time!

Thinking of Selling Your Commercial Property? Now is the time!

Brian Smith, founder of Regent Commercial Real Estate, recently closed on a record sale in Fort Mill, South Carolina. This industrial property sold before it even hit the market!

Off market deal
Record sale for the area
The property sold for $1.3 million, or $108.33 per square foot
12,000 square foot industrial property consisting of warehouse and office space
Closed March 6, 2020

Brian has the connections and the expertise to guide you through a successful commercial sale. Contact him today for a complimentary consultation.  brian@regentcre.com  704.910.9518

 

By |March 21st, 2020|Categories: Blog|Comments Off on Thinking of Selling Your Commercial Property? Now is the time!

How Much Office Space Do You Really Need?

When you rent office space, your monthly rent and all expenses are determined on a per square
foot basis. Since this is the determining factor for all your expenses, it is important to make sure
you have the right amount of space for your needs. While cost is important, you should also
take into consideration how the space layout will affect your employee’s productivity and job
satisfaction.

Your first step is to assess your current situation and have a general idea of your future needs.
Here are a few questions you should ask yourself:

  • How many employees do you currently have?
  • Do you plan on hiring or downsizing in the next five years?
  • Does your current office layout work for you? Create a pro and con list
  • If you do not currently have office space, what would your ideal space look like?

Square footage needs per person will vary greatly depending on your industry and personal
preferences, but a safe average is 175 square feet per person. For example, if you have 25
employees, you will probably need an office around 4,375 square feet. While that might not be
your final number it will give you a general idea of what you will need. Keep in mind that it could
be as low as 150 square feet per person or as high as 330 square feet person. It all comes
down to the type of layout you will need.

You will also need to determine the type of space that will work the best for you and your
employees. Your company will have its own unique requirements so there is no one fits all
approach. While cost is a deciding factor, it shouldn’t be the only criteria. Having an open
dialogue with your employees on their wants and needs can be very helpful at this stage. Here
is a look at the most common layouts.

Open Layout

This type of space will have minimal (if any) private office and conference rooms. This allows for
flexibility and collaboration, but you sacrifice privacy. This type of layout typically requires less
square footage, making this a more affordable option. This space is ideal for start-ups and call
centers.

Private Office Layout

This dense plan consists of private offices and conference rooms. Each employee will have their
own space and will be closed off from their coworkers, however this works if confidentiality and
client meetings are a priority. This type of layout will be more expensive due to the larger square
footage required. Law offices and mental health practices can work well with this layout.

Combination Layout

The 2019 Gensler U.S. Workplace Survey states that 77% of employees prefer an office space
that takes elements from both the open and private layouts. By choosing the combination
layout, you are able to offer an adequate level of collaboration and privacy to your employees.
Now it’s time to enlist the help of a commercial real estate broker to help you find your ideal
space. Once you have found the perfect space it is time to bring in a space planner. A space
planner can help you determine the most efficient layout for your needs.
Regent Commercial Real Estate specializes in tenant representation. They are experienced and
dedicated. Contact them today.

By |March 12th, 2020|Categories: Blog|Comments Off on How Much Office Space Do You Really Need?

How to Start Investing in Commercial Real Estate

Commercial property is considered anything that is used for business. It can include office
buildings, warehouses, retail malls, manufacturing facilities, hotels and large residential
properties. When you invest in commercial property you make money through rental income
and appreciation in the property’s value over time. Investing in commercial real estate can be
profitable, but can also come with significant risks. Buildings don’t always hold value and
tenants don’t always renew. You think you are ready, but where do you start?

Step One: Know Your Why

Take some time to determine what your goals are for purchasing commercial real estate. Some
examples would be:

  • Do you want to invest in a property that you will also occupy or are you interested in
    purchasing a property to diversify your portfolio?
  • Do you want to buy a property that is 100% leased and doesn’t need any immediate
    improvements or do you want to purchase a vacant property that needs significant
    improvements at a lower price (value add property)?

Step Two: Get Educated

Buying commercial property is complicated and it takes research, planning, and time. Eventually
you will need to call in the experts, but it never hurts to have a simple understanding of the
process. This is not like investing in stock. Commercial properties will require your time and
attention to stay on top of any issues. You need to be an involved participant for your
investment to succeed. For example, real estate markets are cyclical so you need to determine
where the market currently stands and when it is expected to change. Getting in at the right time
is essential.

Step Three: Assemble an Expert Team

You know the old saying “you don’t know what you don’t know?” This is especially true when
you decide to invest in commercial real estate. You need to surround yourself with specialists
who have been there, done that and can guide you through this new venture. These specialists
should include:

  • Commercial real estate broker to help you analyze the market and find potential
    opportunities that meets your goals
  • Mortgage broker to help with your financing needs
  • Lawyer to review all documents associated with the transaction
  • Accountant to advise you on tax related issues and to run the numbers before you buy.
    They should also forecast your future returns.

Step Four: Find the Right Property

This is where a commercial real estate broker is essential. Their market expertise is invaluable
as you search for your first property. If you have been thinking about purchasing commercial
property, give us a call. We would welcome the opportunity to discuss your needs and
determine if the time is right to start investing in commercial real estate.

Brian Smith, CCIM, can answer any questions you have about investing in commercial real
estate. Contact him today for a complimentary consultation.

By |March 2nd, 2020|Categories: Blog|Tags: , , , , |Comments Off on How to Start Investing in Commercial Real Estate

How do commercial real estate brokers get paid? 

Commercial real estate brokers get paid a commission on the deals they close. These commissions are paid for by the landlord or seller, no money comes out of your pocket.  

The commission fee is built into the deal and the full amount will get paid to all brokers involved. That means if you do not have someone representing you, the entire commission amount will go to the broker representing the landlord or seller. Do not think that you will get a better deal if you don’t have a broker, because you won’t. The entire commission amount will be paid, it will just go to the landlord or seller’s broker. It would be in your best interest to have your own representation. 

Commission rates are negotiated and it is illegal to set an industry standard, but can range from 2-8%. For leases it is based on the total rent over the term. Sales are based on the final sale price. Typically, the higher the sales price, the lower the percentage. For example:

Deal Structure Consideration Commission Total Commission*
Lease

5-year lease x 2,000 SF x $12.00 per SF 

$120,000 6% $7,200
Sale Price: $4,000,000 n/a 6% $240,000
Sale Price: $15,000,000 n/a 3% $450,000

* split between tenant/buyer and landlord/seller representatives

It is very important to understand that it will not save you money to be your own representative. In fact, you will more than likely rely on the landlord’s representative for some guidance during the process, but their fiduciary duty is with the landlord, not you. You will probably end up paying more in rent and have fewer concessions if you do not have your own representative looking out for your best interest. 

Let’s look at a couple of scenarios:

You have a tenant rep broker

Your tenant rep broker finds you the space, guides you through the process, and negotiates with the landlord for the best deal. For leases, the landlord pays the broker the first half when the lease is signed and the second half when you move in. Sales commissions are paid 100% at the time of closing. 

You do not have a tenant rep broker

You may have thought you would save some money by going directly to the landlord. You have spent your own time doing some research, but probably not enough to know what a fair market rate would be or what concessions you should ask for. You will be dealing directly with the landlord’s broker. As mentioned above, their loyalty is to the landlord and the deal will be in their favor. You will not get the best deal going this route. At the end of the day, the landlord’s broker will be earning the commission your own broker could have earned. 

Regent Real Estate are experts in their field and would welcome the opportunity to talk to you about your real estate needs. Contact them today.

By |February 15th, 2020|Categories: Blog|Comments Off on How do commercial real estate brokers get paid?