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Expert: - 3/8/2009


Question
vacant retail and restaurant in the hardest hit parts of suburban Detroit, Wayne County. 26,000 sq. feet of gross leasable area
Should I contract with a leasing agent/broker? If so, what provisions should be in our agreement/ What are standard commissions? For how long? payable when? Tell me more about what leasing brokers should do and contracts with them. Thank you

Answer
Deborah-
You should definitely get a retail leasing specialist to assist you with leasing the retail space that you need.  Call several commercial leasing brokerage offices in your area that specialize in the market area you are interested in and ask them to refer an agent to you.  Do this with several brokerage firms and interview three or four agents.  

As for references from their past clients and make sure you get some of those clients from recent transactions - within the last 18 months.

Ask them the same questions that you have asked me and take notes on what they say.  You should know when the interview process and checking references work is over who is the best opportunity for you to work with.  If they have no references, have no further discussion, you are in charge.

The size of the brokerage firms means little. The capabilities and references for each agent is significant.

Commissions are different in the various parts of the country and have most to do with the market circumstances in each particular submarket area.  See what each of your prospective agents advises you in that regard and contact the local commercial board of realtors for details regarding commission.

A experienced broker will advise you regarding what the appropriate economic terms of your lease should be. He will be paid his fee by the owner at the property that you end up signing a lease with when the process if completed - you do not pay him yourself.   You need to have an attorney with experience in commercial leasing advise you about the legal aspects of the document. You will pay your attorney on an hourly basis out of your own pocket.  You will need both to be experienced.  Do not make the mistake of thinking that a younger, cheaper attorney is less expensive than hiring a experienced attorney.  You might end up paying for many hours more than you should while an inexperienced attorney learns what the sage old methuselah already knows.  Both the broker & attorney will also tend to give you hints if something the broker or attorney tells you sounds incorrect.

Multi-volume sets of reference books regarding what provisions should go in a commercial lease have been written, so it is better that you hire an experienced broker to advise you regarding those provisions.

Good luck.

-Jim

Commercial Real Estate Investment

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Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area (DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.

Organizations
Currently my three children keep me so busy that it is difficult to participate in organizations with continuing and specific time requirements.

Publications
I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 full pages) feature story on January 13, 1993; titled "Overcharging Overhead".

Education/Credentials
BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

Past/Present Clients
Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.

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