Commercial Real Estate Investment/commercial lease renewel

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Expert: - 5/23/2007


Question
I have been a tenant in a building for ten years I have paid my rent and all re-
taxes  and c.p.i increases in a timely manner. The space I occupy is quite
unique. I own a photographic film and event space. A lot of my buisness is
specifically related to the nature of the space. There are four similar
businesses in the building. The landlord has extended leases of my
competition and also allowed them to rent more space. For seven months  I
have been trying to renew my lease, it expires Nov 30, 2007. I have agreed to
the terms of the new lease, however the landlord keeps delaying sending the
new lease to me. The result of this is that I am unable to take any bookings
beyond November 2007 and as a result I am losing clients and income that
are needed to pay the increases in the rent. Please could you tell me if it is
possible to force the hand of the landlord to sign the lease or if there is any
obligation on the landlord to renew my lease. Also if his delay puts me out of
business, can I seek any compensation? I am based in Manhatten and have
20,000 sq ft,  which the landlord now claims is 23,000 sq ft. I thank you for
your time regarding this matter, Peter White


Answer
Peter:
Your situation is not uncommon, although frustrating.

I suggest you hire a retail broker immediately to assist you renewing your lease and/or to identify relocation opportunities.  Make certain that your broker will be assured of compensation if the renewal is eventually completed or you will not get a talented agent to assist you.  Ask your proposed broker to tell you how to arrange the compensation aspect of your agreement with him in a way that he will have faith he will be paid for his efforts.  He can tell you if your current landlord will agree to paying your broker's fee for representing you in completing the deal that you have been unable to ratify.

It is highly unlikely that you can do anything to "force the hand" of your landlord to sign the lease.  This is another matter where your broker could help you.  If there is any means of doing so, your broker should be able to make that determination, or a good real estate leasing attorney may also be able to advise you.  

There must be language in your current lease or something else in writing you have received from your landlord that makes certain statements that your broker or attorney suggest can help you in your effort to remain in your space.
Most landlords are very careful to avoid signing anything after the lease is signed that would create this kind of entangling commitment, however, every now and then mistakes are made!

Also, I doubt that your landlord has any liability for your loss claims if you go out of business.  Again, check with your broker for his comments.  Better yet, check with your attorney to be certain of your rights.

Sorry I could not be more helpful.
-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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