📘 The How to Add Value Handbook for Commercial Real Estate by Brian Hennessey
- ☐ Leases expiring at less than 20%/year
- ☐ Broker Questions
- ☐ How long in business
- ☐ Asset Specialization
- ☐ Number of properties handled and handling in area
- ☐ Which of these are considered competition
- ☐ How do they plan marketing
- ☐ How much time do they spend on it
- ☐ Exclusive right to lease duration is no more than 6 months at a time, right to cancel with 2 weeks notice after 60 days
- ☐ Report minimum every 2 weeks
- ☐ Property Manager Questions
- ☐ How long in business
- ☐ Where are they located in relation to the property
- ☐ Asset Specialization
- ☐ How do they handle competition
- ☐ What other properties do they manage
- ☐ Experience in the asset class
- ☐ Who is the day to day manager
- ☐ 30 day cancellation provision after 6 months
- ☐ 30 day notice to cancel after 90 days
- ☐ Drive properties for brokers
Leasing Objectives
- Clear the unit of trash and cleaning before showing
- If the floor or carpet is dirty, tear it out and just leave cement
- If odd sized space, demolish into open space since easier to show
- Leases should be staggered
- Lease out in the shortest amount of time at the best terms you can get
Finding Qualified People
- Better to get an experienced lawyer, ask if they’re willing to cap charges
- Walkthrough prospective properties with the PM
- Drive comps with similar signs to find brokers
Property Comps
- ☐ During DD
- recent lease comps
- lease rate
- lease term
- concessions
- type of tenant
- TI
- size of space
- annual increases
- broker opinions
- pm opinions
- recent lease comps
- Remodeling
- fresh paint
- reslurry coating and restriping
- landscaping
- upgrading cam flooring and wall coverings
- ☐ Talk to architect designer on improvement
Marketing for Lease
- 8-10% over comps is over priced
- Plan A, 2 months self
- Plan B, then broker
- 99 designs for graphic designer
Optimizing Leases
- ☐ Walk thru check
- Exterior
- paint job
- Architectural additions: new trim, tiles, columns, planters, monument sign, lighting, wall repairs
- Parking lot repairs (restripe)
- Parking lot repairs (slurry)
- Landscaping
- Tree trimming
- Installing planters
- Fencing
- Front door condition
- Windows
- Interior
- Paint
- Floor
- Windows
- Debris
- Bathrooms
- Ceiling tiles
- light fixtures
- Exterior
- Concessions
- Broker Bonus: Dollar per square foot bonus to sign by certain date
- Moving allowance of 3-5$/sqft
- Free parking
- Early occupancy
- Free gym membership
- Free storage
- Furniture allowance 20% of TI
- Common area free use
- Don’t time the market. Get in, then out
Rent Structuring
To check in Leases
- Additional TI, go towards actually adding value to your space
- Must take space
- Expansion space, first right of refusal within a certain amount of time
- Base rent increase