REoptimizer^® Blog

Why should a broker represent you? The advent of tools like Costar, LoopNet and other listing sites appear to have leveled the playing field for corporate real estate. Given that you could go online and find thousands of spaces to rent, you might be tempted to go it alone. However, savvy corporations not only use tenant representation brokers to find space, but utilize their services for many other reasons. Here's why:

If you need to expand your office space, there's a good chance that your landlord will welcome the idea. Many companies are minimizing space and large swaths of the country are experiencing flat to negative absorption. If you're staying, your lease terms usually serve as a starting point for negotiation. On the other hand, if your expansion plans involve leaving to a new building, those same lease terms could be used against you. As such, your strategy will depend on your needs, and whether or not you intend to stay.

A commercial real estate negotiation is supply and demand in action. When a landlord has open space and multiple tenants competing for it, the price goes up. However, if you have multiple landlords competing for your business, your position improves. While a bidding war for your tenancy might not exactly be an auction, you can still create a bidding war that results in lower lease rates and better concessions. Here's how:

Before choosing an office, most corporate real estate directors go through a standard set of site selection criteria. Key site drivers usually include a location's proximity to major freeways, nearby vendors, supportive services and the area's demographics. While those are all important factors, there are some less-common ways to evaluate a space that may have a bigger impact on how your occupancy will work. Here are five factors that you may not have considered:

A fundamental aspect of corporate real estate optimization is to minimize spending. Lease math can be very complicated and whenever anything changes, there's always a risk that your landlord will make a mistake. When these mistakes occur, it's usually going to be in their favor instead of yours. With this in mind, here are four scenarios in which you must absolutely conduct an audit: 

Commercial real estate software is a quantum leap above any other method of tracking your corporate real estate portfolio. (Yes, even better than Excel.) However, like many enterprise programs, its ability to impact your bottom line depends on how you use it. The more data that you put into your software, the more benefit it can deliver. Here are five types of information that belong in your software so that you can maximize its capacity to save you time and money:

Manage Critical Dates

Using the built-in critical date management feature is an excellent way to manage lease expirations, option notifications and CAM reconciliation dates, to name a few. While you could simply enter them in your primary calendar, your other demands and obligations become priority throughout the day. Portfolio milestones could be easily overlooked amidst your busy schedule. Breaking critical dates out into a separate calendar makes it easier to manage your portfolio.

Organize Site Data

Using the document management feature is an excellent way to keep all the information about your entire portfolio in one, very accessible place. Given a large portfolio, it can be hard to remember whether your 34,000 or 43,000 square foot space is in Portland, Maine or Portland, Oregon, or to remember which has a 24-foot ceiling and which is 26 feet high. Keeping this information straight is important for managing your portfolio.

In addition, you can place all leases and other essential documentation right into the system. This puts all the necessary data you need right at your fingertips so that you can simplify and enhance lease administration. No more rummaging through file cabinets required.

Enter Expense and Adjustment Breakdowns

By entering all of your real estate expenses and projected rent adjustments into your commercial real estate software, you can plan your cash flow. You will be able to tell what your monthly rent and CAM expenditures are at a glance and prepare for increases so that you can notify accounts payable and adjust budgets.

Entering expense data into your commercial real estate software also makes it easier to benchmark sites against each other. If you have spaces of the same type in the same community and one costs $52 for rent and CAM while the other two are $44 and $45, you might want to investigate the more expensive one. Adding usage data, such as kilowatt hours consumed per square foot can also help you track which spaces are meeting your sustainability or cost-saving goals.

Use Performance Data

You can leverage your commercial real estate software as a tool to make smarter, better decisions by using performance data. For instance, adding sales data lets you benchmark your retail sites on the basis of their sales per square foot or their revenue to sales ratio. Include head counts to compare spaces based on employees per square foot. These figures will give you the knowledge to make great decisions in the future when you need to acquire more space.

Use Market Data

While many commercial real estate software programs stop at the end of your company's portfolio, REoptimizer® adds the ability to integrate market data. This lets you benchmark your corporate real estate against the competition. You can quickly identify which spaces are at or below market rents and which are too expensive compared to similar spaces in their immediate markets. With this data, you can strategize renegotiations with landlords, location closures and relocations.

If you need to make real estate decisions that save your company thousands or more, you need to try REoptimizer®. This commercial real estate software system provides all of the tools mentioned above and more.

Contact us to see how it can help you.Are you ready to save 33% or more in real estate expenses? Try a free demo of our commercial lease administration software, REoptimizer® today: 

The process of acquiring commercial real estate for your business really starts once you put the property under contract. While you should do preliminary investigations when assessing potential spaces, the certainty of a contract allows you to put forward an effort that will make the most of your new acquisition. Here are some tips to help you make the most of your opportunity for due diligence:

Do Thorough Inspections (Don't Depend on Disclosures)

In many states, either the broker or seller will have to disclose what he knows about the property. A good rule of thumb with disclosures is to use them as a starting point. Honest parties will tell you what they know, but that's all. If it's August in the desert, there's a good chance that no one will know about a gigantic hole in the roof since it hasn't rained. Furthermore, many sellers and brokers intentionally don't look for problems so that they won't have to disclose anything. With this in mind, treat disclosures as a best-case representation of the property and do your own inspections.

Assemble Your Team

Your team of advisors and inspectors should be ready to go the day that you put your potential commercial real estate acquisition under contract. That way, you won't waste any time during the inspection period. Here is a list of some of the people that you need on your team:

• Broker - market information and transaction services

• General building inspector - general overview of the building's condition

• Building system experts (pest, roof, HVAC) - detailed review of systems

• Space planner / architect / engineer - confirm the suitability of the space

• Attorney - review transaction documents and, in some states, title

• Accountant - review operating statements

• Property manager - confirm operating data

Use your advisors for their specific knowledge, but nothing more. If you need to seek specific legal advice, a building engineer won’t be able to help you with that. Invest in the professional knowledge you need to make the most of your due diligence.

Review Documents for Completeness

If your contract has set time frames for your inspection periods, don't let the clock start ticking until you receive every document that you need to analyze the property. That way, you'll have the full amount of time for which you negotiated. Sellers that are aware of this might want you to sign a receipt for the documents that he provided to prove that he complied with the contract.

Quantify Issues

It's not uncommon to find issues with a commercial real estate property during due diligence. Whether your HVAC inspector comes up with problems that the owner never saw or your accountant finds a discrepancy that could reduce the property's income from existing tenants, problems are a part of buying properties. While it's not unreasonable to expect the seller to reduce the price to compensate for the financial impact of the issue, simply asking for a blanket credit won't work. Instead, have your inspectors quantify the cost of repairing the issue, then have your commercial real estate broker work with the other side to negotiate a reasonable adjustment.

Beat Deadlines

The best way to ensure that you have enough time to complete your commercial real estate acquisition due diligence is to complete every task early. If you have 30 days for inspections and plan to finish them within 21 days, you'll have an extra week and a half in the event that you need to send someone out for a repeat inspection.A commercial real estate transaction can be complicated.

Keeping a careful eye on operating expenses is crucial when managing a corporate real estate strategy. Paying the overall cost for real estate that your company occupies is difficult. The best strategy is to generate cash to pay the operating expenses that impact your company's bottom line. Here are 3 superb tactics that generate cash to improve your bottom line: