We appreciate the participation of those who answered our questions and we hope this survey gives you a valuable picture of what your peers are thinking and doing to be successful in 2023. 

Economic Conditions Survey 2022-2023

                                                                                                      89% of respondents have been in business over 10 years, and 70% 20 years or more. 

The post South Florida Business Leaders 2022-2023 Economic Conditions Survey Results appeared first on South Florida Tenant Rep.

First, let’s address the direct cost – the brokerage fee.  The buyer or tenant does not typically pay their own broker. The seller or landlord normally pays all of the brokers in a transaction.  But does the landlord or seller charge you more if they have to pay your broker?  Typically not.  The asking price for the property is the same, whether you come to the table with a broker or without a broker.  How far down can you, as buyer or tenant, negotiate your costs?  Do you even know what all the costs are?   If the seller or landlord has a broker, don’t count on them to help you – they do not represent you.  If you are not an expert in commercial real estate costs and negotiations, you’re better off hiring an expert broker to be your fiduciary agent and negotiate for you. 

There are many deal points when the Corporate Occupant is negotiating to lease or buy commercial property.  There are economic terms, and non-economic terms.  A good commercial real estate broker will point out and negotiate all of those deal points, give you choices and advice, and help you make sound decisions.  Your broker will save you money and time and protect you far better than you would on your own.  Below, I explain these deal points, and give examples of how I’ve helped clients to negotiate them. 

The Process Involves Many Complex Decisions, All of Which Affect Your Economics

The lease rate or purchase price is the most obvious focus of negotiations.  A landlord or seller will seek the highest price they can achieve, and you will seek the lowest.  Without a commercial property professional representing you, the other side will assume you are uneducated on market pricing, and may try to take advantage.  And unless you do in fact know what lease rates or sale pricing should be for that particular property in that particular submarket, you are negotiating from a position of weakness here.  A good broker will have market comps and experience negotiating on similar properties, and will negotiate a fair market price, or even better. 

The analysis doesn’t end there.  You must consider much more than the lease rate or sale price.  For example, when leasing, what will be the annual increase in your rental rate?  I recently represented a medical doctor in renewing his lease.  Although his lease rate when he negotiated initially (without a broker) was somewhat reasonable, his rate had skyrocketed over 7 years because he agreed to above-market, compounding annual increases in his rate (we all know the power of compounding!).  I let the landlord know that the rate was out of line, and we needed to bring the rate back to a reasonable level with lower future annual increases if the tenant was to remain.  I negotiated a 31% reduction in his rental rate – saving the client $240,000 over the new term – as well as reasonable annual increases to avoid a repeat of the unreasonable run-up in rate. 

Other areas where I see unrepresented tenants lose money is on the cost to build out their space, and the cost to repair, replace, and maintain equipment in the space over the lease term.  Renovating the space before you move in, or building out the “Tenant Improvements,” can be a huge cost.  The cost to build out a 10,000 s.f. office, at just above most landlords’ “standard” finish level, can be well over $600,000 today.  In most instances, I am able to negotiate that the landlord performs the construction work, that the landlord pays for most or all of it, and that the tenant won’t start paying rent until they can move in.  Think about the cost savings if you don’t pay for much of the $600,000, and if you don’t have to start paying rent until the landlord finishes construction, even if they finish late.  Shifting cost and risk is critical.

Further, I see many tenants stuck with the cost of replacing air conditioning units or plumbing systems (even having to dig up the concrete floor slab to do repair work).  This is a negotiable responsibility that I’ve shifted fully or partially to the landlord for many of my clients.  I recently negotiated a right for one of my clients to pay a fraction of HVAC replacement, depending on how many years are left in their lease term.  Would you want to fully replace an HVAC unit when you have six months left on your seven-year term?  No, of course not. Would you think to negotiate a way to deal with that before signing your lease?  Probably not, but your broker would. 

Renewal, expansion, contraction (or termination), and relocation rights are other terms that I negotiate prior to lease signing to ensure that my clients’ interests are protected and their costs are minimized.  There are several others – too many to discuss in detail here.

In a purchase contract, there are similar issues other than price that can help or hurt you monetarily, such as protecting your deposit, dividing costs for closing, surveys, title work, time to inspect, what allows you to cancel and get your deposit back, cost of documentary stamps/recording fees, and credits for repairs and improvements, among many others.  These and other items should be negotiated long before the contract is signed, as they can cost you dearly if you don’t address them, or if you allow the seller to dictate terms. 

In Part 2 of this post, I’ll discuss the non-economic aspects where a broker can help you, and they can be just as compelling as the “hard dollar” items!

The post Part 1. A Question for Business Owners: Should You Hire a Commercial Real Estate Broker for Your Property Search? appeared first on South Florida Tenant Rep.

The focus of Part 1 was the various economic considerations that drive your lease or purchase decision – rental rate or purchase price, annual increases on rent, cost to build out the space (Tenant Improvements), who pays to replace HVAC units – all the items that are measurable in dollars. 

But there are other, intangible factors that can be just as important.  Any of these factors alone can have significant repercussions if not handled properly.  If you don’t understand them all, or can’t identify them,  that’s one more reason to hire a commercial real estate broker to guide you.  In this 2^nd part of the series, I’ll address some of those non-economic factors.

Besides Economic Terms, What Else can a Broker do to Assist?

A great broker does so much more than negotiate the economics of your transaction.  It’s critical that you locate the right property and eliminate the properties that won’t work for you.  Can you do that yourself?  Do you have the market knowledge to identify every submarket you should consider?  Do you know which landlords or buildings have hidden problems – such as call centers over-using parking, roof leaks, poor elevator service? Which buildings are inefficient (have a high common area loss percentage), or which buildings may soon be in foreclosure?  If your broker tracks the market, you’ll have the benefit of that information and avoid buying or leasing a “lemon” that you can’t get out of for years.  There is no lemon law for commercial real estate!

Even if you think you can do all of these things yourself, should you? What is your time worth?  What is your opportunity cost to go out and learn the commercial real estate market – the various submarkets, the going lease rate, the right purchase price based on sale comps, fair market concessions (free rent, tenant improvement allowance) that you should expect?  Will it take you thirty hours?  Sixty hours? Probably more.  If you want a good result, hire a professional who already possesses this knowledge, and use that to your advantage.  Even with 20 years of experience representing Corporate Occupiers and extensive market knowledge, I still spend hours searching for the right properties, sending detailed questions to landlords and sellers, confirming the information that’s listed online and diving deeper for other important facts.  I have a thorough process of vetting properties before sending them to my clients for consideration and before touring so I don’t waste their time or mine! 

Brokers perform other functions that are so helpful in the process:

• Leveling the playing field!  The landlord or seller either has their own broker or has probably been in the commercial real estate industry much longer than you.  Having a broker on your side evens up the market knowledge and brings a pro into your corner.
• Keeping expectations reasonable.  Some tenant or buyers are unreasonable, saying things like “My neighbor told me he leased an office for two years and received ten months of free rent!  I want that same deal.”  I’ve had landlords tell me that they prefer that tenants have a broker, to explain what is reasonable (and what’s unreasonable!) to ask, and to help keep negotiations moving in a timely manner.  I’ve had a landlord broker tell me that a tenant is so unreasonable, that they won’t work with them unless they have a tenant’s broker!
• Conducting a lease vs. buy analysis to tell you which is more favorable for you (both in terms of economics and intangibles).
• Preparing financial projections to show what your lease or property ownership will cost over several years, and comparing all of your choices using these financial projections.
• Connecting you with reliable professionals such as architects, lenders, general contractors, who you’ll need along the way.
• Providing a space program – an estimate of how much space you’ll need to occupy now, and over the next several years, so you don’t outgrow your space and have to relocate early.  These graphic illustrations not only inform the Corporate Occupier, but can be shared with landlords to speed up the negotiation process by providing a clear, concise estimate of the Corporate Occupier’s needs.
• Considering zoning so you don’t end up in a property that you can’t use (I’ve heard of tenants leasing spaces with the wrong zoning, and then being stuck paying rent for unusable spaces).

While these factors, and others, cannot be measured in dollars, they can be measured in saved time and effective results.  They take the element of surprise out of the equation.  Put these issues together with the economic considerations in Part 1, and it is clear that the process of finding commercial space for the Corporate Occupant is much more complex than it appears.  This is not something to do without expert guidance.  An experienced commercial real estate broker will have the process down pat, and be able to help you move through it smoothly to minimize problems. 

To Hire a Broker or Not to Hire a Broker: that is the question.  The answer is yes, you should hire a broker.  Small mistakes or missed negotiating points can cost you quite a lot either up front, or even several years down the road.  The cost can be money, time, limited flexibility, or all of the above.  It can also result in your firm being stuck long-term in a bad property – not a good result for you, your employees, or the clients.  If hurts productivity and your ability to recruit.  Don’t let it happen to you. 

Hire an experienced commercial real estate broker to act as your fiduciary and guide you through the process.  You can’t afford not to!

The post Part 2. A Question for Business Owners: Should You Hire a Commercial Real Estate Broker for Your Property Search? appeared first on South Florida Tenant Rep.

Michael Feuerman joins Brett Amron, Esq., and Jeff Bast, Esq. to discuss their recently-negotiated office lease, and to discuss current topics in the South Florida office markets. Michael is honored to be their first, second-time guest!

The post The Law Firm Practice Podcast Episode #75- Michael Feuerman returns to the Practice Podcast to Review a Client’s Closed Office Lease Transaction appeared first on South Florida Tenant Rep.

The cost to hire a broker varies from market to market. Generally speaking in South Florida, the cost to hire a broker is paid by the landlord or the seller of the property. For sale properties, it’s generally five to six percent of the full sale price. For lease properties, it’s generally four to eight percent of the full lease value over the term. That, again, is paid by the landlord or the seller. It’s not paid by the tenant or the buyer. There’s no cost to a tenant or buyer.

A lot of tenants or buyers will tell me, Isn’t there a hidden cost? If I come in with a broker, won’t they charge me more? The truth is, they won’t. I’ve spoken with many landlords, many sellers and they appreciate having a good professional broker in the transaction that will help keep the buyer or tenant reasonable. Let them know what the market is and it makes the transaction go more smoothly. More where they don’t have two asking prices, there’s not an asking price for people who come in with a broker and then a lower price for people who come in without a broker.

Everyone is starting at the same level. How far below that you, as a buyer or tenant, can get that or how far above, you as a landlord or seller can get it depends on how good your broker and your team is to push that one way or the other for you.

The post Video: “How Much Does it Cost to Hire a Broker?” appeared first on South Florida Tenant Rep.

Michael Feuerman joins Brett Amron, Esq., and Jeff Bast, Esq. to discuss the issues affecting office tenants, and law firms in particular, when choosing and designing offices in the COVID era.

The post The Law Firm Practice Podcast- An Expert’s Insight: Do I downsize, re-negotiate, or lease new office space? appeared first on South Florida Tenant Rep.

Michael Feuerman, Sr. VP of Berger Commercial Realty discusses how COVID-19 will affect the South Florida commercial real estate markets, along with Ken Krasnow of Colliers International and Jessica Del Vecchio (moderator), Economic Development Manager with the City of Boca Raton.

The post Business Briefing – Hosted by Jessica Del Vecchio appeared first on South Florida Tenant Rep.

Many businesses have had to adjust in light of the COVID-19 pandemic. This panel looked at the “new normal” for commercial real estate transactions, with insights from commercial real estate brokers (Michael Feuerman, Sr. VP and Lloyd Berger, President of Berger Commercial Realty), attorneys, lenders, and developers. The panel explored the outlook for the CRE industry over the following 3-12 months including what it will take to get transactions to closing; as well as how can the industry adapt to the restrictions imposed in response to the pandemic.

The post A Look Ahead at the “New Normal” for CRE Transactions appeared first on South Florida Tenant Rep.

On Tuesday April 9, 2019 Michael Feuerman, Esq., SIOR, CCIM, Senior Vice President and Managing Director with Berger Commercial Realty – moderated the Wharton Club of South Florida Profits and Purpose Event – a discussion on Opportunity Zones and Qualified Opportunity Funds.

The panel included Robert Gilbane, Chairman and founder of Gilbane Development Company and a subsidiary of Gilbane, Inc one of the largest privately held construction and real estate companies in our industry; Clarence Williams, Senior Government Relations Consultant at Becker & Poliakoff and Eric Green, CPA and Director of Tax Services for Real Estate at Berkowitz Pollak Brant.

The post Wharton Club of South Florida – Profits with Purpose Event appeared first on South Florida Tenant Rep.

For law firms, office location is critical.  Several factors determine where a firm will lease or purchase an office – building image, surrounding amenities, and traffic and commute time for employees.  Many other considerations come into play, but for firms with a significant litigation practice, close proximity to the county circuit court can be critical.When “time is money,” litigators, court reporters, forensic accountants, and all of their supporting vendors need to get to and from the courthouse quickly and easily. 

With that in mind, Berger Commercial Realty has created a Courthouse District Office Market Report, focusing on office buildings (existing, under construction, and under renovation) within a one-mile radius from each of the three county circuit courthouses –  Broward, Miami-Dade and Palm Beach.  Our report gives an overall indication of market conditions.  Are we in a landlord-friendly market?  A tenant-friendly market?  A turning point between the two?  There are many other variables to consider and we could not cover them all.  But this overview can get you started with your analysis.  If you’re considering a new office, renewal, expansion, or contraction, it’s always best to consult with a commercial real estate broker with local market knowledge and a track record of successfully representing office tenants. 

Vacancy rates are rising across the board, but rents are still rising.  If vacancy rates continue to climb, expect rents to fall.  Currently, Broward County’s Courthouse District is seeing rising vacancy rates, mainly due to new construction of 357,000 s.f. of Class A office space. Before that broke ground, the overall rate was 12.7%, but quickly rose to 16.5%.  Class A vacancy is at 21.2% and gives tenants an advantage until the new space is absorbed; while Class B (4.4%) and Class C (10.5%) stay in healthy, landlord-friendly territory.  The Miami-Dade Courthouse District is slightly less favorable for tenants with overall vacancy at 15.3%, also reflecting new construction of 552,000 s.f.  Class A space is at 18.8% vacancy, Class B at 13.7%, and Class C at a shockingly low 1.1%.  Palm Beach County’s Courthouse District has the lowest overall vacancy at 14.7% (no new construction), slightly in the tenants’ favor.  Class A space in the Palm Beach district is at 12.7%, Class B and C are each at 17.3% – there are excellent deals to be had for good-credit tenants in Class B and C properties. 

Note that some buildings within an asset class or county may be outperforming or underperforming the rest of the market, and buildings (and portfolios) must be reviewed on a case-by-case basis when negotiating, to assess your bargaining power and obtain all that you should in your lease.  Why consider our help? Michael Feuerman, Esq., SIOR, CCIM is an office tenant representation specialist, with over 19 years in the brokerage business, over $272 million in completed transactions, six years of experience as a business litigation attorney before becoming a broker, and long-term relationships with area brokers and landlords.  Michael and his team can bring their knowledge and experience to your team.  We take the burden off of you in analyzing the market, save you time in locating the right property, and negotiating highly favorable terms for your lease or purchase.  Landlords pay our brokerage fee, so there is no cost to you.  Please call us with any questions regarding this report or your own requirement, and we’ll be happy to answer any questions you may have.

Click here to review the Market Report

The post South Florida Law Firm/Courthouse District Office Market Report – Spring 2019 appeared first on South Florida Tenant Rep.

We are pleased to present the results of our 2018/2019 Economic Conditions Survey.  We asked over 2500 firms to comment on the economic environment in 2018, and what they expect in 2019.  2018 was “excellent” for over 1/3 of our respondents, but less than 1/4 expect the same in 2019.  Our respondents gave insight on the biggest challenges facing their firm, how severe the end of the economic cycle will be and when they expect that to happen, whether they are growing or downsizing (employees and facilities), whether investment back into the firm is increasing and what they are investing in, whether profits are up or down, and how they reach customers.  The responses were enlightening, to say the least, and a brief overview of the respondents’ collective background will be helpful in putting the data into perspective.

Who Were the Respondents?

• All firms have offices in the U.S., with at least one office in South Florida.  15.9% of the firms had 3 or more locations in South Florida.
• They operate in multiple industries, including brokerage, real estate development, law, medical, engineering, accounting, banking, insurance, logistics, media, telecom, and financial services, among others
• Over 50% of those answering were equity owners in the firm, and over 74% were either equity owners or C-Level officers
• Over 80% of the firms have been in business at least 10 years, and 60% for 20 years or more
• 51% derive revenue from B2B (business to business), and 37% from B2C (business to consumer)
• 27% of the firms had more than 50 employees, and 73% had under 50.  6.7% had over 500 employees.  9% of the firms had 100 or more employees located in South Florida.
• 69.7% occupy office properties, and 27.6% occupy industrial properties

How was the Economy Last Year, and Where are we Headed in 2019? Most respondents believed that economic conditions for their company were either excellent (35%) or good (46%) in 2018.  Most are optimistic about 2019, but only 23% believe it will be excellent.  Only 1% believed the economy was poor in 2018 or will be poor in 2019.  The majority (64.3%) believe that an economic downturn or recession will come in 2020 or later, while 20.6% believe it has already begun.  58.6 believe that the next recession will be mild, while only 3.4% fear that it will be severe.

Did They Grow (People and Places)?
Our respondents did not report excessive growth in people or facilities last year, nor do they anticipate excessive growth in 2019. 80.4% reported no change in the size of their occupied real estate or number of locations in 2018, and 75.8% expect the same in 2019. Only 4.5% reported employee growth over 25%, while 48.2% reported no change last year. But surprisingly, nearly 38% anticipate employee growth to exceed 25% In 2019, and only 44.8% anticipate no change.

Did They Grow (Profits)?
56.2% of our respondents reported that their profitability increased in 2018 (either slightly or significantly), and the same percentage is expected it to increase in 2019. The difference was those who experienced significant growth (22.9% in 2018) and expect significant growth (13.7% in 2019).

We asked what the change in profitability was attributable to in 2018, and received some interesting answers, reflecting reasons for growth or contraction:
• Insurance reimbursement rates to physicians going down
• Restructuring of business relationships
• Working smarter
• Strong demand

Challenges
What headwinds did businesses face in 2018? When we asked our respondents to identify the biggest challenges facing their company, over 37% chose “Inability to hire qualified employees.” This is something I hear often from my clients and associates. Other responses are shown below.

Investment Back into the Company
Firms continue to invest back into the business. In 2018, 45.9% of respondents indicated that they invested more in 2018 than 2017, and 34.4% indicate that they will invest more in 2019 than 2018. Only 10.3% invested less in 2018 than the prior year, and only 17.3% will invest less in 2019 than 2018.
What are they investing in? We allowed respondents to choose more than one answer, as the choices were not mutually exclusive. Over half of the firms will be investing in technology upgrades. Over a third will focus on employee or management training. And over a third will be hiring additional employees. Over a quarter will invest in advertising, and nearly a third will be expanding or renovating their occupied real estate.

How They Reach Their Customers
Finally, we asked how these companies are effectively reaching customers to grow. The vast majority (86.2%) identified referrals/word of mouth as the best way. Social media posting was a far second, at 26.4%, while social media ads were third at 17.2%. Other responses are in the graph, below, and “sales people” and “brokers” were among the write-in responses.

The post 2018-2019 Economic Conditions Survey Results Are In! appeared first on South Florida Tenant Rep.

Free rent in a commercial lease is a time when the tenant occupies the space but does not pay rent, also called abatement. It is a concession on the part of the landlord to attract new tenants. In a market where you have a lot of vacancy, landlords are more likely to give free rent to attract tenants to their property. In a tight market, its more difficult to get. Typically landlords do not offer to give you free rent, you have to know when to ask for it and how much is reasonable to ask for.

In a retail scenario, when a retail tenant goes into a property there is usually a period of time when the tenant has taken occupancy, but is not open for business because they are building out the space. So there is free rent during this period. However, in the case of office and industrial leases, the free rent is more of an incentive that will help offset the costs of moving and money that you might put into the space.

“A Berger Bite” is a series of FAQ videos in which Berger Commercial experts answer your pressing questions with a quick bite of information!

The post Video: “What Is Free Rent In A Commercial Lease?” appeared first on South Florida Tenant Rep.

Being a fierce competitor, you may want to know if your market is the biggest and the best. Or you may be planning an expansion or relocation from one metro to another and would like an overview. Which has the largest population? Which has the most cities serviced by their airports? Largest industrial market? Best-performing office market? What are their respective vacancy rates?

Based on the data reported in the South Florida Business Journal’s June 30, 2017 special report, “Growing Florida Business,” we have compared the markets for you. The charts, below, show how each metro stacks up on key variables. These are all factors that corporations should be aware of when considering opening an office or warehouse in a particular market.

South Florida leads the pack in total population (6.07 million people), and therefore not surprisingly also leads in cities serviced by airports (154 domestic + 170 international).

Interestingly, South Florida is the only major metro in the state with more international cities than domestic cities serviced by airports. This anamoly is concentrated in Miami-Dade County, with 107 international vs. 54 domestic, most likely driven by service to South and Central America, and the many Latin American headquarters based in South Florida.

South Florida also leads in total office square footage (200.1 million s.f.), and total industrial square footage (368.2 million s.f.). In addition, South Florida currently has the lowest overall office vacancy rate (10.6%) and industrial vacancy rate (4.1%). It’s little wonder that we are attracting investors from all over the world with our high-performing assets!

This is only the “tip of the iceberg” of what you need to know about a market before opening your office. Much more research and analysis goes into my process with each client to determine the best location to do business. For more information on the infrastructure or details of a particular city, county, or submarket, please call or email me.

*Other than Orlando, each major metro area consists of several smaller counties or submarkets. Tampa Bay has four (Tampa/St. Petersburg/Clearwater; North Port/Sarasota/Bradenton; Lakeland/Winter Haven; and Tampa Bay), South Florida has three (Miami-Dade, Broward, and Palm Beach Counties), and Jacksonville five (Baker, Clay, Duval, Nassau, and St. Johns Counties). All are serviced by 2 or 3 airports, except Jacksonville, which has only one. For South Florida, we show the tri-county area but also break out statistics for each county.  For the other areas, we’ve kept the numbers at the metro level only.

The post Which Metro is the Commercial Real Estate Heavyweight Champion of Florida? appeared first on South Florida Tenant Rep.

A couple of these items apply specifically to psychotherapists and their leases, but most apply to all tenants.

Please listen if you’re interested, and contact Michael with any questions. And if you are starting up a practice, reach out to Kate Campbell, PhD, LMFT and Katie Lemieux, LMFT, expert advisors on opening your own psychotherapy practice. You can visit their website here.

This podcast covers the following:

1. Not all office buildings are created equal
2. Fair Market Rent is a moving target
3. Zoning is critical
4. Your lease term will go by quickly, so plan ahead
5. Soundproofing is expensive, and best done before you move in
6. Some landlords should be avoided!
7. Who pays for improvements to your office?
8. Having an attorney review your lease is crucial
9. It will not cost you more to have a broker represent you (it actually won’t cost you anything, and will save you money)
10. If you deal with hardcore mental illness, expect some local public push-back and protest

The post Podcast: Guest Speaker for The Private Practice Startup appeared first on South Florida Tenant Rep.

If you’re in the market to buy commercial property, having a broker is very important. A broker will serve several functions and bring you several advantages. First, they know the inventory in the market. They know what buildings are for sale. They know what buildings are off market, but might be for sale. You could approach them unofficially and make an offer. They know the quality of the building.

A broker will tell you if a building is good for your purposes, if the tenants in the building are good, if the construction is well done or not, if a building might be functionally obsolete, and another property might serve your purpose better.

A good broker will also tell you what the value is, what you ought to be paying for a property. They’ll run market comps. They’ll adjust those comps where necessary and tell you what a particular building is really worth and what you ought to pay.

A broker will then work with your lawyer, or with you directly and help you come up with contract terms before it goes to a lawyer and help you put everything into 1 document, 1 offer document, 1 contract document, make sure everything’s done to protect you.

Finally, and this is something most people don’t think of, a broker will help you think about your exit strategy before you buy. What are you going to do with this property in 3 years, 5 years, 10 years? How much should you expect to get for it? Will your mortgage be paid off at that time? Will you have a balloon, certain things that you won’t think of ahead of time, but it’s very important to go into a purchase with an exit strategy.

The post Video: “How can a broker help me if I am looking for space to buy?” appeared first on South Florida Tenant Rep.

CAM charges are the cost that a landlord pays to operate and run a commercial property. It stands for common area maintenance and is usually interchangeable with the term operating expenses. This would include the common area maintenance, charges for cleaning up common areas, security for the property, property taxes, property insurance, repairs and maintenance. These items are all paid by the landlord and are sometimes passed through to a tenant.

When it becomes important for tenants is to negotiate whether you can cap those common area charges, whether you can take advantage of decreases in common area charges and get refunds if the costs go down, and whether you can protect yourself against increases in common area charges that normally a landlord wants to pass through. Also, you can negotiate what’s included in common area charges and what’s not. We might tell a landlord that we’re not going to pay for particular items if you have enough leverage or if your broker knows where to spot those areas that can be negotiated.

The post Video: What are CAM charges? appeared first on South Florida Tenant Rep.

The due diligence period also determines when a buyer can get their deposit back and when they cannot.  This video explains the concepts in more detail, and why it’s important to work quickly and have professionals guide you through due diligence.

The post Video: Michael Feuerman answers, “What is a Due Diligence Period?” appeared first on South Florida Tenant Rep.

On August 16, 2016, I was fortunate to be able to present a 1 hour continuing education seminar to accountants who are members of the Florida Institute of CPAs. I provided the members with an overview of the office and industrial markets in Palm Beach County. We then engaged in a detailed discussion of how tenants and owner-occupants (buyers) of office and industrial properties locate, analyze, and value their real estate.

A copy of the presentation can be downloaded by clicking here: Commercial Real Estate Presentation 8-16-16 FICPA 

If you have any questions about the material, please contact me at 954-471-4320 or at mfeuerman@bergercommercial.com.

The post Presentation to Florida Institute of CPAs: Tenant and Buyer Commercial Real Estate Decision Making appeared first on South Florida Tenant Rep.

Click here to watch the video: If I am a Tenant, Why do I Need a Commercial Real Estate Broker?

The post Video: If I am a Tenant, Why do I Need a Commercial Real Estate Broker? appeared first on South Florida Tenant Rep.

Click here to watch the video: What is a Full Service Lease

Transcript: “What we typically refer to as a full service lease is a lease where the rate includes all of your costs. It includes your base rent, your operating expenses, your electric, your janitorial. It typically does not include sales tax in a state like Florida that has sales tax, and it does not include your phone, it does not include your internet. It includes all of your other costs. The issue when it comes to full services leases is that you may call a landlord and they might say, Yes, the lease is full service, but they may be referring to something different. Lots of landlords call leases different things: triple net gross, full service, modified gross, passover base year. It’s important to have an advisor who will ask the questions and understand the difference between these lease rates, will actually read the lease and the proposal for you carefully, and advise you on exactly what you are paying and what’s not included and what to expect. You don’t want surprises. As a former practicing trial lawyer, I read all of the documents very carefully for my clients and advise them on what the rate really is.”

The post Video: What is a “Full Service” Lease? appeared first on South Florida Tenant Rep.

When my clients exercise renewal rights in their leases, two things are crucial: exercising the option in a timely manner, and exercising the option precisely as required by the lease.

First, make sure you have the date to renew on your calendar. And on someone else’s calendar, as well. Don’t miss it or there will most likely be no forgiveness, especially in a market like this where there is not enough space, and soon tenants will be fighting over spaces and bidding up rents. Double check the deadline you’ve calculated – check it with your tenant rep broker or your attorney.

Second, give notice in the exact manner required by the lease! If your lease says you must give written notice, don’t give notice verbally.  You must also read the notice requirements, which often say that notice must be sent in writing, by certified mail or nationally recognized overnight delivery service (such as FedEx, UPS, US Postal service). If overnight delivery is required, don’t email your renewal notice.  It doesn’t matter what your landlord says, what matters is what’s written in the lease.  

Clients often ask me something along these lines: “Do I really have to send a renewal notice by certified mail? The landlord said my email was good enough.” Being a former commercial litigation lawyer, I counsel my clients not to leave any room for interpretation when renewing. Landlords do not like giving renewal rights to begin with. We often have to fight to get them.  When you do have renewal rights, follow the lease instructions to the letter (no pun intended)!  If you don’t, you could have a big problem. Seek advice from your broker or lawyer if you are unsure on how to comply with the lease.

A recent article regarding a coffee shop in Downtown Miami that allegedly sent their renewal notice by email highlights the dangers.  http://therealdeal.com/miami/2016/05/13/eternity-coffee-brews-legal-battle-with-downtown-miami-landlord/ The landlord in this case alleges that the tenant did not properly give notice to renew. The tenant believes that they have another 10 years of renewal term and that the landlord wants them out so they can redevelop the property. “The landlord…claimed that [the tenant’s emailed notice of] renewal in October, which read ‘We are planning to stay,’ was ‘very vague and not clear cut,’ the suit reads.” The parties are now tied up in litigation, which will almost certainly be extremely costly, and moreso for a tenant than a landlord.

Don’t fall into that trap! Pay attention to deadlines and required methods to give notice and seek guidance if you are unsure.

The post Tenant Renewal Rights – Exercise Them EXACTLY as Required in the Lease! appeared first on South Florida Tenant Rep.

As a commercial real estate broker specializing in office and industrial tenant representation since 1999, I have learned to help my clients determine what office features are a true need (space for current employees and room for future growth, enough parking to satisfy the zoning requirements, redundant internet providers, for example) vs. what are features that they would like to have in an office but in reality, could do without.  With these guidelines set, it becomes far easier to choose which properties to tour and which to pursue for lease proposals.

But how do business owners differentiate between needs and wants?  Open and thorough discussions with the broker, key employees, and to some extent with clients, will help the business owner identify the true needs.  Some needs are easy, the total square footage you need now and in the future, the amount of internet bandwidth you’ll use, the number of offices vs. open work area, for example.  Others are harder.  Which building out of the 8 that we toured should we focus on?  Where should the office be located? Should I choose Class A or B?

The old saying in real estate is relevant to cost: location, location, location. For example, office rents in the downtown core normally far surpasses a similar building in a suburban market.  Moreover, downtown traffic brings more stress and longer commutes for your employees.  If your clients are not located downtown, your clients don’t regularly visit your office, and your key employees are not living there, then there is probably no reason to be there.  You will save a significant amount by locating your office in a suburban submarket, which, by the way, often have offices that are just as nice as anything you will find downtown.

Similarly, the class of building will be a large factor in cost.  Comparing newer, Class A buildings with older, Class B and C properties, you can see a difference of $10.000 to $15.00 per s.f. or more in annual rent in South Florida.  If you don’t have to impress clients or recruits, most see Class A rents as a needless luxury and will bypass those buildings.

And so on with other features of office buildings which can push up rents: newer construction, storm-impact windows, the amount of parking spaces available, concierge or security in the lobby, etc.  Once we are done with this analysis, my clients are normally able to tune out the noise, rule out buildings that don’t meet their needs, and easily identify the top two or three locations.  From there, let the negotiations begin!

The post How do you choose a Location? Determine your needs, then your wants. appeared first on South Florida Tenant Rep.

CAM is one cost that a building owner typically will pass through to tenants in their monthly rent, along with real estate taxes, property insurance, and other operating expenses. It should be addressed in your lease, and you should be paying your proportionate share of the total expense. For example, if your firm occupies 15,000 s.f. in a 100,000 s.f. building, then you would pay 15% (15,000 divided by 100,000) of the total CAM cost for the year, divided into 12 monthly payments.

How is CAM determined? The amount is estimated by your landlord at the beginning of each calendar year, and then reconciled the following year. This has to be an estimate, as the expenses are not known until they are incurred. The estimate is normally based on the last several years of cost history, with any known increases or savings factored in. After the year is over, the landlord reconciles the actual CAM payments. If they were lower than what was estimated, you will get a credit back (usually a rent credit), and if they were higher than what was estimated, you will get a bill.

CAM is one part of the overall Additional Rents, which is usually a defined term in a lease, including anything other than your base rent, that you will pay to the landlord. If you don’t take CAM and all other Additional Rents into account when you are estimating your future lease payments, or when you are negotiating a lease, you could be in for a very unpleasant surprise when you receive your first lease invoice. It’s important to know and understand all costs that you will pay as part of your rent.

CAM should be a pass-through for your landlord, not a profit center. Some elements of CAM and additional rents can be capped if negotiated up front. Some landlords will attempt to include some non-customary costs in the CAM or Additional Rents. A good tenant representation broker and a good lawyer will guide you and help you predict and negotiate your costs, protecting you from unforeseen or inappropriate items that you might otherwise agree to pay for if you are unaware.

The post What is “CAM”? appeared first on South Florida Tenant Rep.