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Part 6 – Negotiating a favorable agreement
Before the parties begin negotiating the lease document, and before the lawyer is consulted, the design process typically has already begun. By the time the LOI is prepared, the parties usually have at least a preliminary space plan for an office lease or a site plan for an industrial or retail project. The basic scope and nature of the construction will have been discussed and an understanding of some sort reached. The negotiations should flush out the unstated assumptions and expectations of the parties and resolve points of conflict.
Negotiating the lease should not be difficult! In fact, many landlords recognize that providing “superior tenant service” begins by making the lease negotiation process as simple and efficient as possible, as long delays over minor details serve neither party. Increasingly, landlords are shortening the lease negotiation process through a system of alternate lease clauses used to substitute standard clauses as appropriate, to avoid having to write specific language each time an issue arises.
How well does your lease protect you?
The selection and acquisition of facility for a company’s business is one of its most important decisions it will make, and it can mean the difference between profitability and failure. Commercial leases are made for the long-term, and the payments made under a lease often represent a significant portion of the business’ expenses. The total financial burden of rent, costs of tenant improvements and other lease charges can significantly impact the overall success or failure of a business.
The focus of lease negotiations by a tenant is often limited to rent, concessions and other economic considerations. As a result, many important issues are often overlooked, misunderstood or under-negotiated (even by sophisticated tenants) that could materially affect the long-term success of the deal and the company. Negotiating the best possible deal is done throughout the entire leasing process, from the initial decision to move forward through lease execution. To reach the best deal, and to prevent costly disputes or unforeseen expense, it is crucial to negotiate a favorable and highly detailed agreement.
This really speaks to the heart of a serious problem. On-the-job training has traditionally been the primary path to knowledge by brokers when it comes to leasing, and as a result, you could spend years of expensive trial and error and still never attain competency. Did your tenant rep professional help protect you throughout the lease negotiation process, or were your left to fend for yourself once the base rental amount was agreed upon? Was your broker willing to fight for you when negotiating lease provisions with the landlord? Did your broker bring years of legal training and lease negotiation experience on behalf ot the tenant to your transaction, and take ownership of the terms and conditions of the lease agreement?
How well does your lease protect you? Are you confident that you’ve negotiated a favorable lease? Let us protect your company from unpleasant problems, it’s not just about rent when it comes to negotiating a good lease deal. You can better serve your company’s interests by mitigating the risks concerning your corporate occupancy, to negotiate the best possible deal in the marketplace. We’d be happy to show you why we’re Studley!
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Negotiating the lease deal
It is amazing how often companies find themselves looking for guidance because an unpleasant surprise has come up during the term of their lease, with the vast majority of such issues costing them significant dollars (that wasn’t included in their budgets) in attorneys’ fees and costs to remedy the situation. Often such surprises are due to having signed a poorly understood or poorly constructed lease agreement and could have easily been avoided. This is especially true of smaller, less sophisticated tenants who, for whatever reason, sign the landlord’s “Standard Form Lease” with few, if any, changes.
A lease is much like a partnership agreement in that it governs a business relationship that could last for many years. When everything goes as planned, most leases will serve the parties well but the true test occurs when there are hiccups in the relationship. If the lease has not been carefully drafted, a hiccup can become a major problem. Tenants often lose sight of the fact that the “Standard Form Lease” represents the landlord’s wish list, and if not appropriately modified, will likely not serve their interests when issues arise.
Most tenant rep firms do not fully protect their clients throughout the entire leasing process, as achieving a favorable deal includes the careful negotiation of the definitive lease agreement. This is where our Studley team differs from the rest. We’d be happy to show you why we’re Studley!
It’s official: Target taking over Tamarac Square in Denver
Southeast Denver‘s Tamarac Square will be razed and replaced by a Target store and other retailers, Developers Diversified Realty Corp. announced today.
The Beachwood, Ohio-based firm characterized Tamarac Square as a “non-income producing parcel” that will be sold to Target for construction of the store.
Developers Diversified said it intends to redevelop adjacent retail space to accommodate “demand for additional high-quality retailers.”
The company, which owns and manages approximately 520 retail properties around the country, said it is also razing the Terrell Plaza Shopping Center in San Antonio and selling that property to Target.
“The redevelopment of the two non-income producing assets into prime shopping centers is a perfect example of the continued execution of our redevelopment strategy,” said Paul Freddo, Developers Diversified’s senior executive vice president of leasing and development.
Freddo said that Tamarac Square is currently 90 percent vacant.
The redevelopment will provide Target access to a market exceeding 720,000 people within a seven-mile area, said Freddo.
He said that upon completion of the 135,000-square-foot Target store and the renovation of the adjacent 33,000 square-foot convenience center, the project will be 98 percent leased.
The combined gross investment for the Denver and San Antonio projects is $40 million, according to the company.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com.
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