The Business Owner’s Upside to a Down Economy: Commercial Real Estate

I just read in the Business Ledger that business owners who lease or buy commercial property can leverage the economy to improve their #1 expense line item after payroll. The bottom line is that the tenant or buyer has an advantage given the turmoil the landlord/seller is experiencing. Landlords are not receiving rent and losing tenants to bankruptcy. Sellers are seeing their property values drop considerably and are looking to short-sale prior to foreclosure.

Seemingly, there is hope for the tenant and buyer. I have always been a proponent of having the business owner’s rights represented. And in today’s economy, appropriate commercial real estate representation is crucial. From the tenant’s vantage point, the lease agreement can make or break a business. There are clauses within every lease, such as termination options (the ability to terminate a lease prior to the lease end date), holdover clauses (lease ends, rent increases at the option of the landlord until a renewal lease is set in place), that the typical business owner may only glance over or overlook. It is the responsibility of the tenant rep to make sure the interests of the business owner are represented and those items negotiated in order to protect the interest of the tenant.

Commercial real estate buyers are looking for a sound analysis of the market. It is the responsibility of the commercial real estate broker to bring to the buyer’s attention the vacancy rates and more importantly the net absorption rate of space. In other words, how much space is available and how quickly can it get filled; this is typically a direct relationship to the asking rent of the project.

In today’s economy, the savvy business owner understands that knowledge is crucial in surviving this recession; and the knowledgeable commercial real estate broker is an invaluable asset as part of the business owner’s team.

Personal Touch is Still Key

I was just perusing the February 2008 Issue of Commercial Property News (CPN) when I came across an article that hit home for me: Lost Connection, Technology May Enhance Business; Industry Still Wants Human Touch. My mentor, a 30 year veteran in the real estate community, has always told me to pick up the phone and make an appointment for lunch, coffee, whatever; just connect face to face. I have to admit, it makes all the difference.

This week, I've been incredibly sick, yet still needed to move things along for clients. I've used technology as a primary source for communication. Emails come to my phone, which is next to me at all times. My computer is not far away as I need to pass along vital information for negotiation. Yet when my client said I need you at this meeting, I showed up. And that connection brought value to my client. As a result, the loyalty ticker just shot up with this client. On the other hand, because my voice sounds like a frog, I've avoided the phone at all costs. Information was communicated using technology. It was prompt and efficient. Nevertheless, another client was incredibly annoyed that I wasn't available via phone for that real-time interaction.

To sum it up, I concurr with the article. Technology has made commercial real estate more efficient. But it's the face to face that makes the deal.