THANKS to Social Media...and #CRE REAL people!

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984.

As the year closes and we wax philosophical, we are thankful for many things this time of year...family friends, health, life, and faith...that great CRE year!

Certainly, I am grateful for ALL of those...but...I am thankful for social media this year and the way it's connections...with REAL people...have enriched my life and my commercial real estate practice.

The title is a double entendre (of which I am a fan)..."Thank You" for the engagements that social media has generated...and..."because" of social media the connections are much deeper!

I thought it would be fun to review a few of this year's social media highlights...so here goes!

Duke Long lunch and meetings: Duke and I connected in 2010. I became an ardent reader of his posts and one day picked up the phone and called him...he is a real person! We continued to talk via the social media channels until this year when he visited SoCal twice! We lunched, coffeed, and met several of the Lee folks locally as 42 Floors was gaining traction. Duke was kind enough to pen this post about our time together. I am pleased to say that I made all four Duke Long lists this year! Brokers you must follow on Twitter, LinkedIn, Blogs...and the coup de grace...the "Dukey"!...Top ten most influential CRE folks.

Coy Davidson dinner, meeting, and CREW OC presentation: I began following Coy in 2010. One of the young associates in my office recommended that I check out Coy's impressive social media presence. I was blown away! I realized that Coy was the "gold standard" for #CRE and social media and that if I accomplished one tenth of his social media visibility, I should be proud. Like Duke Long, I called Coy. Whattaya know...another real person! Coy and I share the state of our birth...Texas...and realized we had several mutual connections from his days at UT. We nearly made a deal when one of my SoCal clients was considering a Houston location...I called Coy. When Coy was asked to speak at the July CREW (Commercial Real Estate Women) of OC luncheon, we had dinner the night before and I was one of only four dudes...the room was packed mind you, BUT, it was a women's only event...in the room to hear Coy speak...cool stuff!

Howard Kline (CRE Radio) lunch, radio show, Lee Summit and dinner: This is a funny connection...not the people, the circumstances. Howard commented on one of my LinkedIn shares. I watched Howard's interview of Lee's former CEO, Ed Indvik. We connected on Twitter. We attempted to meet. The problem was that neither of us bothered to figure out that we live ten minutes (approximately 15 miles) from one another! I thought Howard lived in New York and he thought I lived in San Diego...oh well, we made up for it. BTW, I should mention that Howard is a real person. We lunched, I was honored to be Howard' radio show guest, Howard conducted CRE Radio from our Lee and Associates broker Summit in Las Vegas and we had dinner together with our wives. Howard is now engaged (he is a practicing attorney, you know) to help a building owner of mine with a tenant collection issue.

Matthew Smith coffee: I noticed that Matt from REA was an avid re-tweeter of my stuff...VERY kind of him. I was headed down to Carlsbad for a presentation and called Matt. We met for coffee and had a great time. You guessed it...he is a real person!...starting to see a trend here? Matt and I are scheduled to panel a webinar together on LinkedIn in January...should be epic!

Bridget Williard lunch with Tom Riggins of Riggins Construction: Bridget was an early adopter of social media for CRE...before there was such a thing in 2009. As the construction industry suffered through its most difficult time in SoCal, Bridget found herself at a desk, with a computer, and with lots of free time (no one was building or remodeling any commercial buildings) so she decided to jump into the social media fray. Thousands of us follow Bridget on Twitter, read her blog(s), and learn daily from the Guru! Well, guess what?...yep...she is a real person! We lunched, connected with her company's owner, Tom Riggins and this creative post soon followed...sorry for the pun! I learned that Riggins Construction provides building inspections (pre lease or purchase) in addition to the construction work that they accomplish...a real "arrow in my quiver" of referral partners!

The News Funnel guest blog post: My thanks to Lindsey Kacher of The News Funnel and Funnel Cast! She actually called me and discovered...I am a real person! I was honored to be her guest blogger recently...and one of the 30 most influential CRE folks on Twitter!

Linda Day Harrison: Last but not least. Linda and I became Twitter pals last summer. She, like Matt Smith, REALLY promotes CRE brokers! Linda's theBrokerList is the foremost resource for CRE practitioners through the published "haves" and "wants" and broker profiles. If Linda doesn't re-tweet one of my tweets within five minutes...I start to worry that I goofed...she is THAT responsive and supportive! The ONLY reason Linda and I haven't met in person (she is a real person, I have the photos of Howard Kline and her to prove it) is geography...She lives in Chicago...maybe we will meet in person in 2014!

Have I made any money with this stuff? YES!...but the currency of engagement...with real people...is the special gift I received this year!

I have several notable "real people" on my "hit parade" for 2014...watch out Barbi Reuter, John Orr, Bo Barron, Todd Stewart, Carol Stephen, Chris Clark...I may call you for a meeting when visiting a city near you.

#CRE Social Media content "can be" fun!

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984.

 A great deal has been written lately about "content creation" and "content marketing". Some of those folks are much smarter than I am and believe that content marketing is the new SEO for commercial real estate.

I believe that content for our stodgy, buttoned down, #CRE industry can be fun as well as provide helpful information.

Enter the Dave and Al cartoons that some of you may have seen on Twitter via #HumpDayHumor for CRE.

Below is the real story behind the Dave and Al cartoons along with some of my faves! Enjoy.

 

Fill a #CRE vacancy...FAST!...Here's how

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living.

If you own commercial property, at some point you will suffer a vacancy. If you have the opportunity to "salvage" an occupancy, PLEASE DO! You can read this post where I define the cost to originate a new lease...the $$ are staggering! NET, NET, it is MUCH cheaper to maintain an existing occupant.

If you cannot salvage the occupancy, most likely, you will engage someone in our profession to find you a tenant or a buyer and represent your interests in the market.

So how do you find the VERY best commercial real estate professional for the job?

Gear your search around these points and your vacancy will be filled...QUICKLY.

Define your reality: Is your building vacant or occupied...and if occupied, will it be vacant during the marketing period? Are there substantial improvements that need to be made...office refurbishment, equipment removal, major repairs...for your building to compete for a tenant or buyer? Are you a seller? Are you a landlord? How much debt is recorded against the property? How long can you "carry" the building vacant? Are you (or a company you own) the occupant? Where will you move?
What will be the showing protocol...lock box, show card, broker meets prospects at the building?

Specialty: Most successful commercial real estate brokers are specialists...location or building category. You wouldn't seek to have open heart surgery from an orthodontist. Likewise, if you ask a "big box" tenant representative that you met at your son's volleyball game to market your manufacturing building, the results will be heartbreaking (sorry, couldn't resist).

Generally, your commercial building will fall into one of three categories...office, industrial, or retail. Each category has a number of sub-categories...Office (high rise, mid rise, walk-up, etc.) Industrial (manufacturing, warehouse, flex, etc.). The size of your available space and the location are easily determined.

You now have defined the scope...Industrial (manufacturing), 30,000 square feet, in Anaheim, California. So, you are looking for the BEST commercial real estate practitioner that sells or leases manufacturing buildings (10,000-50,000 square feet) within a 10 mile radius of Anaheim, California. Depending upon the market (urban markets drive more specialization than rural markets), you may find one or one hundred practitioners with this specialty.

Comparable inventory: The specialist(s) should be able to provide a list for you of all of the similarly sized comparable transactions they have completed and the number of similarly sized buildings they currently have available for sale or for lease. This only tells part of the story, however. A specialist may have a number of listed properties but be an absolute tool (do you want this person attached to your property? Remember, this is YOUR representative).

Competition: The specialist should be able to provide commentary on the currently available buildings that will compete with your building and a number of "market" deals that have occurred (in addition to ones that the specialist has completed). Test the specialist here. Anyone can provide the list, but only someone intimately in the market will be able to tell you "why" the deal occurred...in other words, what was unique about the deal. Ask the specialist to take you on a car tour of the competition. You want to be treated as if you were buying or leasing a building. This exercise can be very illuminating on the specialist's knowledge of the market and will enlighten you on how your property "stacks up".

Cooperating brokers: Ask the specialist (that you are considering engaging) the names of his/her main competitors. Call the competitors. Get from the competitors "their take" on the specialist's reputation, competence, etc. Remember, the specialist's competition may represent a tenant or buyer that will fit into your building. You definitely don't want to engage a broker with a bad reputation.

Creativity: Every commercial real estate broker can install a sign, create a brochure, enter the building in an MLS (multiple listing service), mail post cards, alert the neighbors, talk to the active cooperating brokers, host an open house...yada, yada, yada...what is the specialist planning which will create a unique marketing strategy for YOUR building?

Lost revenue from a vacancy can NEVER be recovered. The right commercial real estate broker choice can get your property leased or sold quicker...minimizing the lost revenue.

Five #CRE news aggregators you MUST follow (and I do!)

I provide Location Advice to owners and occupants of manufacturing and warehouse buildings in Southern California...AKA I sell and lease commercial real estate for a living and have since 1984. I am also an avid blogger of all things CRE as frequenters of this blog will attest.

I am a content creator. I write blogs. I record YouTube videos. I author cartoons. I appreciate EVERYONE that spends time reading, listening, and commenting on the content I create!

I LOVE news aggregators (especially the ones that publish my stuff)...and some who don't. If you are not a content creator BUT still want to stay abreast of commercial real estate news and follow the content of many thought leaders in the industry, I would suggest subscribing to one or more of the following commercial real estate news aggregators.

...but before I go there...What is a news aggregator anyway? Wikipedia defines it this way: "In computing, a news aggregator, also termed a feed aggregator, feed reader, news reader, RSS reader or simply aggregator, is client software or a web application which aggregates syndicated web content such as news headlines, blogs, podcasts, and video blogs (vlogs) in one location for easy viewing."

Many words that mean "a single source of web content". Here are five of the best in the biz (IMHO)

The News Funnel
The company line: Founded in 2011, The News Funnel adds a new twist to aggregated content for business professionals in the Real Estate industry. TNF gather trade news and information from trusted industry sources and then let users craft that information into a custom feed that is unique to their geographic market, industry segment and areas of interest.
My take: Great combination of original content, guest blogging, interviews, and aggregation. I am honored when my stuff makes the TNF top ten list! I also love the customization feature that allows me to see industry info in SoCal.

CREReport
The company line: CREReport is an information resource for CRE professionals. They developed the report to promote news, trends, and events impacting the commercial real estate landscape. The project combines research, original writing, and mobile-friendly publishing to provide the reader with a uniquely collaborative and informative reading experience.
My take: Todd Stewart does a great job tracking the Atlanta market BUT also sprinkles in original blog posts from thought leaders as well.

GPE Connect
The company line: GPE Connect is Arizona's best commercial real estate newsletter. Every weekday at 8 AM, they deliver the news, topics and trends that impact the Arizona market.
My take: Great recap of the Arizona market. Even though I don't typically do business in Arizona, since they are neighbors to the east, I love to follow what's happening.

TheBrokerList
The company line: The first FREE online list of CRE (Commercial Real Estate) professionals. This is the first opt-in, self-service, no charge site for the CRE professional. With everybody searching the Internet for absolutely everything, it makes sense to have an opt-in list for the world to find “YOU”! So many CRE professionals get lost on the web and inside large corporate directories. It can be frustrating to find YOU and keep up with who is where. This website is a down and dirty way to make it easy to find YOU and your geography and specialization. Simple. If you are a Listing Administrator, you must also add yourself to theBrokerList.
My take: A phenomenal combination of broker profiles, industry info (haves and wants), and original blog posts. Linda Day Harrison will absolutely enhance your brokerage practice...so sign up!

Costar
The company line: Costar is the nation's premier multiple listing service for office, retail, and industrial as well as an industry source for analytics.
My take: Good info, well structured. Could use more original blog content from industry thought leaders.

So there you go. Now get smart, y'all!

Get more #CRE referrals...five GREAT sources

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984.

I have to confess, there is NOTHING better than a qualified referral! You walk in to the meeting, present your engagement agreement and get the business...many times without having to compete!

Today's post discusses five GREAT sources and ways to generate more qualified referrals for your commercial real estate services.

...A brief review,

First, if you don't have a specialty...either in geography, CRE product type, building or employee size range, industry type, or occupant or owner, you might want to read this great post by Bo Barron which will enable you to define your specialty by answering three simple questions. By the way, Bo coaches commercial real estate practitioners, speaks on all things commercial real estate, etc...so he is a bit of an expert...you think?

Second, the reason a specialty is soo important is because your specialty defines your target which forms the basis of your message which should be easy to understand by EVERYONE who asks...not just fellow brokers. The message should be simple, easy, and delivered in 25 words or fewer.

Example:
What do you do? I provide location advice to owners and occupants of industrial buildings in Southern California...I keep companies in California by helping them save on real estate....OK that is 26...close enough!

Finally, who do want to be referred to? If you cannot define that, referrals will be scarce!

Alright, we have our specialty, our message and the "who"...on to the five great sources.

Fellow Brokers: If you examine your referral sources over the years, you will discover the greatest source for #CRE referrals is from other commercial real estate brokers...OK, we get that. Here is a spin that you may not have considered. What do the office guys in your office do when they encounter an industrial deal or vice versa? What if the lease you just accomplished for an owner becomes a leased investment sale? If you make sure that your fellow company brokers, your "tribe" of cooperating brokers, etc. are clear on your expertise...and they "like" you...chances are you will get referred.

An aside...The like factor...I don't care how good you are (or you think you are), if you are an asshole, nobody will refer you!

Strategic Network Partners: Your target (owners and occupants of industrial buildings) is a target for other professionals that don't compete with you, yet supplement your efforts. Commercial bankers, commercial insurance agents, business attorneys, wealth advisors and CPAs all have clients that need location advice. Easy enough? Here's a suggestion. Ask the most recent deal you accomplished (an owner or an occupant) who handles their insurance or provides their tax advice. See if they will introduce you to the professional. If so, schedule a meeting, a call, a Skype conference, or face time conversation to discuss what you accomplished for your (their) client, how you might assist others AND how you might refer other of your clients to them...HUGE!

Existing Clients: In addition to the above idea, ask your clients (immediately after you complete a transaction) to introduce you to three people...real estate need or not. They will naturally gravitate to professionals in a similar industry.

Friends and Family: Nothing is more embarrassing...and costly..than to discover a friend made a real estate deal without you. When Coy Davidson and I met recently, he relayed a story to me about a friend of his who bought an office building and later confessed..."I didn't know you did that". I say shame on you! PLEASE make sure your friends and family know what you do, how you do it AND how to reach you...which leads  us to the ever powerful SOCIAL!

Social Media: Blogs, Facebook, YouTube, Twitter, Instagram, LinkedIn, Pinterest, Google+ all provide different formats for "subtle" advertising about what, where, and how you do what you do. A resi broker friend of ours recently saw a Facebook post about a deal I accomplished and mentioned to my wife..."oh, so that is what Allen does"...and she sells real estate! Please don't race out and flood the airwaves with commercials OR your latest listing OR a deal you just did...most won't care...BUT an occasional reminder, link, video, etc. is a great way to stay top of mind.

#CRE communication...with someone under 35...AKA, how to get your call returned!

I provide Location Advice to owners and occupants of industrial buildings in Southern
California...AKA...I sell and lease commercial real estate for a living and have since 1984.

I read a post today from Carol Stephen (one of my favorite blogs) called Baby Boomers and Social Media which had a link to another post entitled the 20 Differences Between Baby Boomers and Gen Y. If you haven't read these posts or are unfamiliar with Carol, please spend a minute and check both out...well worth it! The posts stirred some creative juices AND revealed some differences between generations that inspired this post.

...And being a proud father of three young adults born between 1983 and 1988 who are married to two more (all of whom I love more than life itself), I somewhat qualify to give advice on effective communication with millenials.

If you are a boomer (as I am), born between 1945 and 1957 your business conversation hierarchy...most important to least important is:

• Face-to-face
• Call to the office or home
• A reluctant call to the cell...only in an emergency
• Write (letter)
• Email
• Other...text, social media outlet, etc. 

If you were born prior to 2000 and after 1982, chances are (I guarantee it) you have a different business conversation hierarchy...most to least.

• Text
• Tweet
• FB message (if over 30)
• Instagram (if under 30)
• Other...call (are you kidding me?), email, face-to-face, what is a home phone anyway
• Write?...hmmm, not if more than 140 characters

Ok, I have now highlighted the differences, how do you effectively communicate with someone under 35?

Here are some suggestions:

Make it all about them If you have ever dealt with someone under 35, you know that the minute they want something, it cannot happen fast enough. In the return situation...not so much. Tailor your message ever so slightly to make them the focus. Example: My wife and I rented a beach house for a week next year with the hopes of having a nice family gathering. We needed to get "buy in" on a week that would work for all of us. We knew that if we called, texted or "othered", we would be lucky to get a timely response from one out of five...so, we text messaged all five and said "we are discussing an early distribution of our estate. Please call". Within five minutes we heard from all five! Now we didn't lie...the travel and rental (that we are paying for) were an early distribution.

Employ the DEFCON system I love the movie War Games. A computer game generated global nuclear war (not really...it was only a game but NORAD didn't know that!) DEFCON was used in the movie. DEFCON (1-5) stands for defense condition and reflects the current status of military awareness (1 least to 5 most) in preparation for an attack. DEFCON for communication to someone under 35 is 1st level (email) 2nd level (call) 3rd level (text) 4th level (all three at once) 5th level (a personal visit).

Send them a letter...THIS will freak them out!

Reward them for responding

Mirror their timing In this crazy digital age, your contacts can now be any of the 24 hours in the day. Watch when people under 35 respond to you and mirror that timing.

Don't take the lack of gratitude personally Boomers grew up believing that to not respond was rude...because our Ps and Grand Ps were from the "greatest generation" where gratitude was a part of life...because folks died for our freedom (voluntarily)...and we were grateful! If you don't get a thanks for a job well done or for a gift you sent or for busting your ass to make something happen (see all about them)...try not to take it personally...they certainly don't...or they would say thanks.

How to avoid #CRE "time wasters"

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984.

Today, I am posting for three reasons...therapy, education, and as a personal reminder.

As commercial real estate practitioners, we only have two things to sell...our information and our time. Levels of our information are available as a commodity, for the world to see, and we only have 168 hours per week...that's it! Now, we can place our expertise on top of the basic data levels...but we cannot create anymore time. I realize that is trite but stay with me, here. Avoiding commercial real estate time wasters is tantamount to locking your house at night...If you don't do it, you might get robbed!

I mentioned in the preamble my three reasons...here goes!

Therapy: Without a doubt, I have encountered (and unfortunately been engaged by) more time wasters this year than I can remember in my career that spans four decades!...and I pride myself on my qualification skills! Some were requirements unable to be filled, which resulted in lease renewals. Some were loooong drawn out RFP processes or market surveys or tours or owner education or...All had the same result...no revenue! Time invested with no return...the death knell of any commissioned sales person! Now before you go all sappy and feel sorry for me, please don't. I am the most blessed man on earth for myriad reasons that I'll save for another post...but maybe you can learn from my mistakes this year.

Education: OK, some of this is brokerage 101...but I'm going to spin it for you.

• Work with control I know, basic, right? But how many of you make this mistake? I tell the young guys in here, "working without control is like drinking and driving" You might get away with it but when you get caught...and you will...the consequences are severe.
• Qualify, Qualify, and keep Qualifying Qualifying is ongoing. Remember to qualify "throughout the process"...not just at the front end of the transaction.
• Think "anti move" Let's face it, moving sucks! It's disruptive, time consuming, counter productive, inefficient, and expensive. Its like a knee replacement...painful but necessary sometimes. Be VERY candid with your occupants about the downside of moving locations. When things get tough in the transaction...and they will, you can relay your discussion and remind your clients why moving makes sense.
• Make the client "convince" you How many of us have fallen for "we want to buy a building"? I always ask my clients "why would you want to do that?" The answer is illuminating!
• Beware of the corporate "local guy" Ok, these can be your biggest advocate or CHAMPION time wasters. Is the local guy willing to give you complete access to the "real decision maker" or are you trying to fulfill his dream location that has NO CHANCE of materializing or passing corporate scrutiny?
• Beware of lengthy processes Decisions on who to hire are rarely the result of the biggest package, the best presentation or the fattest response to an RFP. They generally boil down to a "relationship"...what a concept.
• At some point, they gotta give back My Mom taught me that a relationship must be a fifty fifty proposition. Why should this differ in a real estate deal? Examine how much YOU are giving and how much the client is giving in return. This can be as simple as timely returned phone calls, emails, texts, etc. or as complicated as deciding on a strategic direction.
• Out of State...out of mind Anyone out there ever dealt with an out-of state company that is tremendously responsive when you are face-to-face but once the plane leaves the tarmac, so does the responsiveness?  Candidly, I've still not figured this one out! Next blog post?

Personal reminder: TRUST YOUR GUT! If it walks like a duck, quacks like a duck, has feathers, flies south for the winter (and you are not in Eugene, Oregon)...chances are they are a commercial real estate time waster!

Warehouse automation and safety for commercial real estate

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living.

I was asked recently by Cisco Eagle to provide commentary on automation and warehouse safety. Of course I was honored to participate!

I decided to crowd source the answer as well as relying upon my expertise and that of my client Raymond Handling Solutions.

If you would like to read the post you can click here.

I posed the following question on the material handling group on LinkedIn.

In your opinion, can safety "be automated" in warehousing facilities? Please explain.

Which produced the following answers:

Brian O'Reilly

Sales Manager - CT Products at Gorbel

With enough software and sensors, anything can be automated and made "safer". But as long as there is human presence in the warehouse, nothing can be guaranteed safe or accident-proof. And even in "Dark" warehouses with ASRS Systems, equipment malfunctions and items are damaged.

 

Buddy Fordham

Parts & Service Sales Rep. at Thompson Lift Truck Company

I agree with Brian. Anything that is automated or Software controlled can malfunction. Anytime you add the human element, it's always a moving target. I've been in the Lift Truck business for over 25 yrs. and a Safety Trainer for over 16 yrs. Every aspect needs to be covered and Good Habits established. The only thing consistent is change.

 

Jorge Lopez

Sales and Marketing Manager Latin America

Agree with Brian, everything can be automated, but we should consider that we only are reducing risk, but risk are still there, we can use all ultimate safety devices to avoid any injury in people, but still we most train people about risk and possible injuries if they don't take care about their own safety. Sick is probably the best choice in safety systems due to all their innovations in this area.

 

Scott Stone

Advertising & E-Business Manager at Cisco-Eagle

Safety can't be "automated," but varying degrees of automation can be integrated into safety. Automation cannot guarantee safety unless a plant is empty of people. Items such as motion sensors or AisleCop gates to help people be more aware of forklift traffic simply help to enhance safety. In a sense, safety railing on stairways is safety "automation", but it's not useful if people simply climb over it. Also, in a sense, robots that do dangerous work are safety automation simply because they remove people from a hazardous area.

 

Tony Hart

Avonwood The RFID Specialists

So very interesting points here. At Avonwood we have produced our ZoneSafe system which can be fitted to FLT's and other vehicles which alerts the driver that a pedestrian is near his vehicle. This is normally set to between 3 and 9 meters. However you can use the technology to alert pedestrian when a vehicle is in a certain area for example. We have always been quite clear that what we offer is an aid to safety and does not substitute for good existing practices and training, but it does go some way to help improving warehouse safety.

 

Frank Lucas

Associate / Team Member at Nestle S.A.

Having worked in the MH and Heavy Equipment environments and now in the processing and production area where the traffic is quite heavy share sentiments such as Scott that SAFETY can and must not be automated. Tony makes good points always that guards and company policies can be instigated to assist with the safety issues. I truly believe that SAFETY is something that must be properly trained for and thus each and every employee is subject to the responsibility of looking after themselves and ALL those around them. Cheers.

 

I discovered that there is a big beautiful pool of expertise out there just waiting to be utilized! Thanks all for your participation and to Susie Romans for the opportunity!

Don't use Social Media for Commercial Real Estate...IF

I provide Location Advice  to owners and occupants of industrial buildings in Southern California...AKA I sell and lease commercial real estate for a living and have since 1984.

I recently started following The News Funnel on Twitter which morphed into a sign up for their service...it is free by the way...and has resulted in the inspiration for this post.  Thank you Lindsey Kacher! The post is available here, as well!

I can hear the collective..."wait...I thought this was "don't" use social media? Ummm...he just sited an engagement through social media...what's up"?

Well my friends, that is the large word "IF".  You may be a commercial real estate dinosaur...

IF you don't care to engage with other #CRE thought leaders on industry "what's ups"

IF you have an established practice and there is NO chance that could EVER change (think 2008)

IF you would rather cold call for new business than have "them call you"

IF your thing isn't CRE inspiration, education, entertainment, or content consumption (you never read a newspaper or watch TV)

IF you prefer sign calls (do those exist anymore?)

IF you believe an "on-line presence" is a gift from Amazon.com

IF you want to be invisible to your clients AND new prospects

IF you can contact ALL of your past clients enough by calling them

OK, you see where I'm going? If you answered yes to one or more of these questions, you should ignore social media marketing for your commercial real estate brokerage practice. If, however, you believe that there is some merit to this "on-line" stuff...read on.

What's the best way to get started? Slowly! If you've never been to a backyard BBQ, don't make a White House state dinner your first meal away. Social media is about engagement. Each platform has its own language. YOU'RE NOT SELLING, here...you are listening, learning, and when you believe you can "add to the conversation", make a contribution.

What social networks are most effective? The one(s) where you can "find your voice". Some very successful #CRE social media marketers simply aggregate other's content. Others are serial bloggers...via You Tube or a written platform. There is no "correct way".

What's a good content strategy? One that is "sustainable"...like that green friends? Choose a strategy that will allow you to post, comment, or curate consistently.

How do I measure its effectiveness? When you get that first re tweet (thanks Linda Day Harrison, Bridget Willard and Matt Smith), that first comment on a group share on LinkedIn (thanks Howard Kline), when someone "likes" your business page, when your blog page-views reaches 500,000 (How's that feel Coy?), When Howard Kline invites you to be his guest on CRE Radio, when Duke Long calls and says..."hey I'm coming to SoCal, any chance we could grab coffee?...and then you appear on one or more of his Top Ten Lists!, when The News Funnel contacts you and ask you to guest blog...when you realize that you are not a voice in the wilderness...that someone is listening! Notice I didn't mention money. That's right! If money is ALL you care about, go manage a hedge fund.

What's the next big thing in Social Media? Who knows? I leave that up to my friends at the News Funnel...If I follow them, they will tell me.

Leave the dinosaurs to Fred, Wilma, Barnie, and Betty.

"How to" make a WINNING #CRE presentation

I provide location advice to owners and occupants of industrial buildings in southern California. Most in the CRE trade would agree that we present every day and consequently must structure our presentations for a YES. This could be presenting ourselves, our building alternative to an occupant, a marketing plan to an owner.

What about trades that don't present? I contend that ALL of us present...every day and structuring our presentations in the following manner will help you get the YES that you seek.

The Premise: Have you ever heard the phrase, "I don't sell for a living" so sales techniques are not important? Well I have, and I disagree! EVERYONE sells, EVERYDAY...you just may not think of what you do as selling. Three quick examples..."Darling, I believe we should try that new Latin restaurant that just opened"...which could result in all of the normal objections...too expensive, too far, I don't like Latin food etc." You probably will be eating frozen pizza! "Son, how about completing your science project before we go to the Angel game this weekend?"..."Oh Dad, I have this, its not due until two weeks from now, you are old school..." You may be dashing to Office Solutions at 10:00 PM the day before the project is due. "Hey guys, what about moving our golf outing to Shady Grove this weekend?"..."too tough a course, no caddies, etc." So you get the idea. EVERYONE SELLS, EVERY DAY. The success of your "selling" is up to you!

The Presentation: The key to "making the sale" is to make the idea; your client's, spouse's, child's, etc. their idea. I have discovered that the easiest way to accomplish this is to structure your presentation to include five easy steps...summarize the situation, state the idea, explain how it works, reinforce the key benefits, and suggest an easy next step. I honed these skills schlepping shortening in the seventies! Believe me, you had to make the idea the grocers if you wanted to convince the grocer that he should lose money on your product...tough sale!

Summarize the Situation: As simple as "Darling you mentioned the other day that we should add some "spice" to our lives". To as detailed as "You mentioned that you have seen several new signs on buildings in the area. We investigated your observation and discovered that the vacancy rate on industrial buildings in North Orange County has significantly increased in the past six months. The deals that are getting made fall into two categories...class A buildings leased at class C prices, and buildings sold at 2002 pricing. Your building is Class C. If your desire is to lease, then you must realize that tenants can demand "C" pricing on "A" buildings." A concise summary can build the "ownership" of the idea.

State the Idea: As simple as "Let's try that new Latin restaurant that just opened". To as detailed as "We recommend pricing your building to move. We must compete with "A" space and the best way to do that is with aggressive pricing." Make the idea statement very direct.

Explain How it Works: As simple as "The restaurant is running a two for one special if we reserve before 6:00" We can be there and back in no time and with the money we save, maybe we can catch a movie!" To as detailed as "We have a complete list of tenants in the market that can receive information on your building today. We believe that the aggressive pricing will separate us from the masses. Additionally, we can forward the information to all of the active industrial brokers in the market. Lastly, we have established a rather aggressive Social Media marketing campaign through theBrokerList that will allow us to distribute the information through Facebook, LinkedIn, and Plaxo." Very important to clearly define your plan.

Reinforce the Key Benefits: As simple as "Spice darling...like you said" to as detailed as "Leasing the building one month sooner than anticipated will save you ...$.

Suggest an Easy Next Step: As simple as "Let's leave in an hour" to as detailed as "We have prepared the agreement and upon your written approval, we will begin the marketing campaign."

It really works!

Try forming your persuasion into these five easy steps and enjoy the "sales" that you make every day!

"How to" avoid a guaranty of #CRE leases

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984.

I was touring with a client the other day and he told me that he has not guaranteed a lease in fifteen years (he is only 33). Another large operator that we represent, has over 500 commercial leases,  and guarantees none of them...did I mention that the leasing entity has no assets?

Other occupants that we have represented are required to personally guarantee the lease without any discussion....without regard to creditworthiness, tenant improvements, term, or use.

So what is the difference in the above scenarios and what are some means for avoiding the personal guaranty?

Business dictionary.com defines a "personal" guaranty as:

"An agreement that makes one liable for one's own or a third party's debts or obligations. A personal guaranty signifies that the landlord can lay claim to the guarantor's assets in case of the tenant's default . It is the equivalent of a signed blank check without a date. The landlord is generally not required to seek repayment first from the tenant's assets before going after the guarantor's assets. The landlord's actions are usually based on whose assets are easier to take control of and sell. Once signed, a personal guaranty can only be cancelled by the landlord". Read more:

In effect, the guaranty is a security measure to insure the owner gets his rent. The ways to avoid a guaranty are seeded in understanding the owner's risk, clarifying the owner's reality, and proposing alternatives which provide security.

The owner's risk: An owner can spend up to 25% (or more) of the lease's future income originating the lease. I discuss that in this post. An owner wants to make certain the he receives his rent.. as the first several months of the lease's origination are net of revenue (the income reimburses the cost of origination). Only in the later months of the lease does the lease generate any cash flow. Understanding the actual origination costs of the lease are important. How much "free rent" did the tenant receive? How much was the brokerage fee? What, if any, special purpose improvements did the landlord fund? Was the space vacant for long period of time? The dollars associated with the lease terms generate a sum of money that could be construed as "risk". What will the owner lose if thebb tenant defaults (aside from the future rent payments)?

Clarifying the owner's reality: Assume that a 20,000 sf building is leased for five years at $.65 Industrial Gross with 3% annual increases. Generated is a potential income stream of $839,914. I will assume for this example that 3.5 months of "free rent" are outside the term ($45,500), that the owner spent $20,000 on improvements (north of paint and carpet), and paid a brokerage fee of  $41,950. The "concessions" and fees total just over $107,000 or 12.7% of the future rent. We have not considered the vacancy period preceding the occupancy. The owner wants a "guaranty" of the lease's revenue and has spent $107,000 in hopes of receiving $839,914.

Alternatives to a guaranty: My experience is that "reducing the owner's risk" is key to eliminating or modifying a guaranty. I have successfully negotiated the following "solutions".

• Increase the security deposit: In lieu of a mechanism to insure rent receipt...which could include legal action that costs time and money...giving the owner double or triple the normal security deposit gives the owner cash in reserve to cure the non-payment of rent (and gives him money at execution to offset origination expenses). 
• Shorten the term of lease: Shorter term, fewer concessions, less risk. I've used this approach with start ups who have little or no rent payment history.
• Reduce the amount of Tenant Improvements: This reduces an out of pocket expense to originate the lease...thus reducing the owner's cash risk
• Encourage the occupant to accomplish the Tenant Improvements: Similar to the point above. Occasionally corporate occupants have a "pool of money" for tenant improvements which is accounted for differently than lease payments.
• Spread the leasing commission over the term of the lease: This does two things, the owner "pays as he goes" thus reducing the cash outlay at the lease execution AND if the tenant defaults, the fee payments stop. Some practitioners argue that they are not "guarantors of credit" but I've seen this work to avoid a guaranty.
• Only guarantee a portion of the obligation including an "earn out bonus": The owner has shelled out over $100,000 to originate the lease in hopes of receiving $840,000. How about only guaranteeing the $100,000 and with one year of faithful and timely rent payments, the guaranty goes away?
• Restructure the "free" rent to "abated" rent and spread out the concession: Abated rent is recoverable in the event of a default, free rent is not. Classify the free rent abated rent and spread the abatement over the term (1st, 13th, 25th months) of structure the abatement as 1/2 rent for a period of time. The initial cash flow drain is minimized.

Good luck with your deals! Hopefully this helps you close more lease transactions.

Broadcasting Commercial Real State on WII-FM

Broadcasting live from WII-FM Commercial Real Estate Radio. We are here live in Orange County, California where I provide Location Advice to owners and occupants of industrial buildings...AKA, I sell and lease commercial real estate for a living and have since 1984...so what? you ask...What's In It For Me?

Recently, I had the honor of dining with Howard Kline of CRE Radio. Howard is a delightful chap (although he didn't wear his bow tie) and we had a terrific time "capitzing" about all things CRE...The lunch ended with a great idea and a way for Howard to achieve a goal of his...increase the advertising for CRE Radio. Although the purpose of the lunch was simply to get acquainted, we really helped each other...me, an upcoming appearance on the CRE radio show on October 11 and Howard an appearance at the Lee and Associates broker Summit in Las Vegas AND a new strategy to appeal to advertisers.

Our lunch sparked a thought...too often we look at things from our perspective and not from the perspective of our prospects and clients...in other words we think about "what is in it for me" and not "what is in it for the prospect".

A quick example: We as commercial real estate brokers (in this case we are the prospects) are bombarded by lenders...all purporting to have the best rates, easiest qualifying process, cheapest origination fees, etc. NEVER, has one of these lenders taken the time to figure out what might be in that for me or one of my clients...they all assume that I have a buyer that might need financing and that I could be a great referral source for them. What falls short on the WII-FM radio show...they haven't figured out a way to appeal to me or my clients by providing the "what's in it for me" solution. Now, maybe that sounds selfish. That is not my intent. My intention is to suggest that this is lazy...in light of all that is available to us on line about companies, individuals, connections, etc. If said lender has sent me a note that went like this..."I noticed that you closed x number of sales last year including a, b and c. It appears that you used y lender. Is there a time that we could meet next week to discuss a way that I can help you close more deals"?...ahhh, yeah, when can we meet!

We as commercial real estate practitioners make the same mistake by not crafting our message to appeal to the "what's in it for me" for our prospects. We bombard the email ip's with listings, we flood the US mail with flyers, we tweet the airwaves with "buy my stuff"...CRE Canada, you are the worst! We don't use the available channels of WII-FM!

So what is in this post for YOU? Just this. Think about your offering. What makes it unique? Why should I care? How can you modify the message to appeal to a need. What extra can you provide to differentiate yourself? What motivates a prospect to hire you?

WII-FM is broadcasting daily throughout the USA. Don't miss another episode!

"How to" sell commercial real estate with YouTube

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA I sell and lease commercial real estate for a living and have since 1984. Today's post centers around one of the most exciting channels (pardon the pun) of social media...YouTube. If you own or broker commercial real estate for a living and you are not using YouTube to sell or lease your buildings...you are sadly missing out on a HUGE opportunity.


So how pretell is it done? Here are five ways that I have successfully used YouTube to sell and lease my commercial real estate listings:

Low tech: VIDEO If I want to generate a vast amount of "trial" quickly, create a searchable address for one of my listings (Google owns and loves YouTube), and get the video produced in a hurry, I simply take some footage of the building outside and in, narrate as I go, upload the footage to YouTube and post the link to theBrokerList,  Loopnet, CoStar, post it to my blog, forward the link to an inquiry etc. Sometimes the market reacts more favorably to a "low tech" video clip because it doesn't appear to be "produced". I wouldn't recommend this for some of the glitzy high rises that are in Manhattan...but for an industrial building in Fullerton, California...low tech works just fine! Did I mention that the address becomes searchable? Huge if someone drives by and googles the address! Important note: Make sure you title the video by the address...street, number, city, and state.

High tech: VIDEO Generally speaking, industrial buildings are boring...concrete boxes with very little sex appeal. They all are not created equal, however. A high tech production of the interior of your commercial real estate building can gain a lot of traction, endear you to your owner by selling or leasing the building quicker, and save those in the brokerage community a tremendous amount of time and effort. Think about it, if I produce a virtual tour of the interior of the building, reference the link on my marketing materials, forward this link to those in the community...prospects and brokers...that would be interested in the building, the "preview" of the building is complete! Voila...no traded calls, no preview "walk-throughs", etc...we can get right down to business and schedule a tour that is meaningful since the preliminaries are accomplished.

Generate "efficient" tours: Let's face it, a tour must be accomplished before a transaction can occur. Tours are necessarily time consuming. But how can we use YouTube to insure that tours are efficient uses of everyone's time? Take a virtual tour YOURSELF! You are previewing the building anyway, right? Why not take the trusty device along and video the preview? You can then send this link along to your client for their review before you drag them out of the office to see a building that won't work. If you want to give an owner of a commercial real estate building a tour of his competition...even better!

Introductions: Some commercial real estate practitioners insist on being present when tours take place. Some owners require that all tours be escorted by a member of the marketing team. UGH! How about this. Send the prospective tour participants a preview of the deal, owner, motivation, etc. VIDEO. This step will help qualify the prospects and cause your time to be spent productively.

Special sauce: Want to REALLY impress the marketplace and reduce the time between a listing engagement and a paycheck...besides aggressive pricing, of course? Take an extra step and generate a QR code that can be affixed to signs inside the building, on the signs outside the building, on brochures, postcards, and other marketing materials. I can hear the collective cry out there...those damn things don't work because no one scans them. Well, my contention is that QR codes are widely misused...AND...once we as a community figure out how to correctly use the medium, the magic will occur...plus, we sound REALLY old when we say that!

"How to" lose a commercial real estate deal...and like it!

I provide Location Advice to owners and to occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984.

I HATE to lose and if you relish losing, you will not be terribly successful in the commercial real estate game as a silver medal doesn't pay very well...like zero! I recently lost an assignment that I should have won (but don't we believe we should win them all?).

Once the shock of losing wore off, I became philosophical and would like to share that with you.

As one of my partners said to me..."you actually may have won and don't know it". So how do you lose a commercial real estate deal and like it?

Consider why you lost: Were you the right choice? Why? Was the assignment in your "wheel house", could you sight several examples of SIMILAR transactions that you have completed? Did you have a relationship with the decision maker or was the interview your first introduction? Were you dealing directly with the final decision maker? Was the fix in and you were just a "folder filler" to justify hiring someone else?"How to" like it: Courteously engage with the decision maker after the decision is made and ask what you could have done differently to earn the business. See if you can glean the "real reason" that the choice was made. LISTEN to what is said and respond accordingly. The next time you compete for a similar assignment, you will know the deficiency and can prepare accordingly. Hint: My experience has indicated that the larger the RFP, the higher the likelihood of losing. Someone is "adding value" by making you compete. The one chosen will have some angle...trust me!

Why did you compete? Some of the largest and most complicated commercial real estate transactions I have  completed required NO competition for the assignment. That sounds counter intuitive, I know, but it is true. In many cases, I have forged solid relationships with owners and occupants so that once my services were needed, there was no interview...I was already hired...because over the course of building the rapport with the client my capabilities were understood and my value was realized. "How to" like it: Relationships that begin today may lead to transactions in the future...so keep meeting, greeting, and learning how you can help the relationships that you build. Hint: People do business with those they know, like and trust. Sounds simple but rarely will this code be broken. You may the most likable and trustworthy candidate but if they don't KNOW you...forget it!

Be gracious in defeat: Jack Nicklaus, probably the greatest golfer ever and one of the fiercest competitors of all time won 20 major championships and 73 professional golf tournaments. He finished second in an astonishing 39 major championships! Jack Nicklaus is the sport's greatest champion but also was a quintessentially gracious loser. He would immediately congratulate the winner and compliment them on their victory. "How to" like it: Find out who won the assignment, contact them and congratulate them. Offer your assistance. If you don't know the person who received the assignment, strike a relationship with them. You lost an assignment but you can win a new relationship. Hint: The victor will be "blown away" that you acknowledged the victory and will remember that you are a "class act"...they might even share some insight as to why they were chosen.

Losing is always tough but remember you can still like it and good things are ahead...and you may have "won" by not being selected for the assignment. Small consolation today...big benefits tomorrow.

"How To" win commercial real estate deals with Blogs

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living and have since 1984. 

I have blogged for three and a half years and have written about all things commercial real estate. I have in essence "worked out loud."

Recently, I was asked to compete for a tenant representation assignment...cool, right?

This is what we all strive for...a chance to flaunt our capabilities and maybe score a new assignment and ultimately some commission dollars.

I have accomplished almost seventy tenant or buyer deals in the last 3.5 years, so I believed that I was VERY qualified for this assignment! I thought, bring it on...when can we meet?...not so fast!

My enthusiasm soon evaporated when I received the RFP (Request for Proposal) through email...Hmmm, the RFP...those three letters send a chill up the spines of most commercial real estate brokers... three pages long, single spaced and filled with compound questions such as "Quickly provide a brief overview of your firm. Describe your approach to the marketplace and how you perform your services. Describe who would be your point person and what would the communication and update process encompass." and "Describe what additional services your firm provides. Describe any other contributions or offering that your firm provides that might assist a tenant such as this with this assignment..."...Well, you get the idea!...A LOT OF WORK...with no guarantee of success!

My first reaction was...damn...looking for a building isn't rocket science, is all of this necessary?

My second reaction was...and this is what I get for the relationship I have been building?...a CHANCE to compete?

I next went to...well, I am just not gonna play...if that is what they want, I'm not their guy.

Finally...and fortunately I kept the previous thoughts just that...thoughts...I decided to roll up my sleeves and let 'em have it!

So how did I compete for this assignment and shine? My blogging! My past posts enabled me to complete the RFP with ease and as a result of reading some past posts, I reminded myself that...hey, I MAY know what I'm doing!

Describe your firm? Wait, I wrote about that in 2010!

Can you outline your process? Absolutely! I wrote about that in 2010!

How are the market conditions? Nice...2013!

What challenges do you foresee in our search and how do we "shorten our downside"? All over that...2013!

How will you assist us in lease negotiations? How about this one from 2010?

What differentiates you from your competition? Let me wax on grasshopper! 

How do you add value? Awesome! Here's how.

So in short, all of the time I spend "working out loud" through my blogging helped me with this assignment! I hope that it will help you as well.

#CRE brokerage...1985 and today

I provide Location Advice to owners and occupants of industrial buildings in Southern California...aka I sell and lease commercial real estate for a living. My wife, Carla and I went to see the movie Jobs recently and the movie really caused me to reflect on just what an impact Steve Jobs made on the way in which we do business as a world generally and as commercial real estate brokers specifically...WOW! As I sit here in front of my Dell laptop which is tethered to my IPad, with my IPhone close by, technology is VERY easy to take for granted...just like we did in 1985....well maybe not so much. Just how far have we come in 28 years?

In 1985:

Then: Steve Jobs was "demoted" from Apple's board of directors...a company he and Steve Wosniak founded in a family garage a few years prior. Now: Steve Jobs R.I.P but not before leading Apple to a market cap in the hundreds of billions by converting millions of technology users to IPhones, IMacs, IPads, IPods, MacBooks, etc...truly stunning!

My company Lee and Associates had 3 offices in Orange County, California...we now have 48 offices across the USA.

In 1985 I had lots of brown hair, only two children, the same wife, a desk, and a phone...Today...grey, three plus two, desk, phone, mobile phone, laptop, IPad, GPS...and that's just at the office. Multiply that by two for home.

Prospecting:

Then: We prospected for new business by visiting the company in person, calling them, or sending them a letter. If we had vacant buildings to lease or sell and signs on the buildings...we maybe got a call from someone who saw the sign and was looking...that's it! Now: Google searches, CoStar, Prospect Now, theBrokerList, Loopnet, Linked In, blogging, Twitter, Facebook, Pinterest, Organized networking groups, You Tube, email, eblasts, autobot calling, texting, CRMs...how many ways there are today to prospect for ANY company ANYWHERE! Virtually no one is invisible anymore.

Survey and Research:

Then: When we engaged a client who was in the market for commercial real estate, we met with the company in person, discussed the requirement, and "bought" ourselves a week so that we could research the available buildings, contact the listing brokers, gather the brochures (hard copy via mail or delivery), have a survey typed, assemble the tour books...including maps with rub on numbers. Now: We conduct the building search at the client's office on our IPads using CoStarGo and/or we conduct the search at our office, create a PDF and email the file including brochures and/or we YouTube a virtual tour of the space and email to the client. What used to take a week can now be done in ten minutes. I have at least four multiple listing services available to use on my desktop and two that are mobile. I can publish a requirement and receive global distribution in seconds using theBrokerList or BrokerRoster or Rofo. Fortunately commercial real estate brokers do not compete on price for our services OR with the abundance of free information on line, we would get skewered. All commercial real estate providers have the same information...it our service and knowledge of the owners and transactions that allows us to create value.

Touring:

Then: We picked up the client, and started the building tour. You better be familiar with the streets because GPS didn't exist. Now: You can practically direct a building tour from the clients office BUT if you have to drive, there are plenty of navigation tools that make driving in different cities very easy.

Negotiating:

Then: An offer was that...binding and signed by the tenant or buyer. The points were entered into a contract, typed and hand delivered to the client for review, approval, and signature. We also collected a "good faith" deposit that was held un cashed until the deal was made and the leases were signed or the PSA was executed. You "actually met" with the cooperating broker in person and submitted your offer. Any responses were also done in letter form and were mailed or hand delivered...remember we had no fax machines! Now: We have these "silly" wimp clauses in a proposal that state that even if I sign this, I am making no commitment to lease your space or buy your building if and until I sign a definitive agreement which I can still revoke if I disapprove...yada, yada. Much is lost today as "expressions of interest" have replaced actual offers and meeting in person is rarely done. Some of my closest friends in the brokerage community are that because the "old days" forced us to meet, negotiate, and get to know one another.

So what is the net effect In My Humble Opinion?:

Technology in commercial real estate has made us faster to respond, better at servicing our client's needs, and quicker to react to changes in the world economy. Our connections are more global and less local. Our relationships are shallower but more plentiful. We MUST filter an incredible amount of data quickly and efficiently to compete...and the competition is fierce. Nothing has replaced a referral from a trusted friend or advisor. The face-to-face meeting still trumps a call, email, text, LinkedIn request, Facebook comment, tweet, etc.

Do I miss 1985? Absolutely not! After all, Grecian Formula is still available for us grey haired old dudes...and I never rocked the mullet, anyway. Plus we got two delightful new additions to our family this year in a new son and daughter...no I didn't sire them, two of our kids got married.





#CRE glossary, commonly used commercial real estate terms

I provide Location Advice to owners and occupants of industrial buildings in Southern California. Commercial real estate language is second nature to practitioners but may be a bit foreign to occupants negotiating their first lease or purchase. This post is designed to provide a "one stop glossary" for those terms most commonly used in "the trade". These definitions are in layman's terms are are not meant to be "legal definitions". Think of this post as a Rosetta Stone of CRE.

NNN: Also called "Triple Net" refers to the way property taxes, property insurance, and maintenance of the foundation roof and walls are paid by the tenant. Generally, these sums are paid as due and are "net" of the base rent...in addition to...but in some cases the owner will collect a monthly estimate of the annual expenses in addition to the base rent.

 

Modified Net: Similar to NNN but one or two of the "Ns" are included in the base rent.

 

Gross: Property taxes, property insurance, and maintenance of the foundation, roof and walls, and other maintenance of the property are included in the base rent. Gross lease rates are generally higher than NNN lease rates.

 

Industrial Gross: Similar to "Gross" but the tenant is generally responsible for some property maintenance in addition to the base rent. These leases include a "base year".

 

Modified Gross: MG, Property taxes, maintenance of the foundation, roof and walls, property insurance, or other maintenance of the property are paid in addition to the base rent.

 

Full Service Gross: FSG, Generally an "office" term and refers to the Gross expenses plus janitorial and utilities included in the base year. These leases have an "expense stop" and a "base year" for expenses.

 

Expense Stop: Used in a FSG lease. The expenses of the base year (first full year of the lease) are calculated and the tenant pays increases above this "stop".

 

Base year: Used in FSG, MG, and Industrial Gross leases. The first full year of the lease. The tenant pays increases in expenses over the base year.

 

Lessor: Landlord...property owner

 

Lessee: Tenant. Entity that leases or rents the location

 

SubLessor: Tenant

 

SubLessee: SubTenant

 

Master Lessor: Property owner

 

CAM: Common Area Maintenance and is generally in addition to the base rent and commonly found in MG, or Industrial Gross leases

 

TIs: Tenant Improvements

 

Bumps: Increases in the base rent that occur throughout the term of a lease

 

COLA: COst of Living Adjustment

 

ROFR: Right of First Refusal...a tenant's right to buy the property in the event an acceptable offer (from another party) is received by the owner.

 

ROFO: Right of First Offer...the tenant's right to submit an offer in the event an owner decides to sell the property.

 

Option to Renew: A tenant's right to extend the term of the lease at pre-negotiated points.

 

Option to Purchase: A tenant's right to purchase the property at pre-negotiated points.

 

LOI: Letter of Intent...expresses, in a non-binding fashion, the occupant's desire to lease or purchase the property.

 

Due Diligence: A period of time negotiated in a purchase and sale agreement for the purpose of studying the property to determine its suitability for financing, occupancy, title, etc.

 

Loan contingency: A period of time used for securing financing.

 

Prelim: A Preliminary Title Report which outlines matters of record...loans, ownership, recorded easements, liens, etc.

 

Free Rent: A period of a lease that is "rent free".

 

Abated Rent: Similar to Free Rent but in the event of tenant default, an owner can sue for repayment of abated rent.

 

NOI: Net Operating Income...the rent on the property less any expenses stated on a annualized basis.

 

Cap Rate: The NOI divided by the purchase price.

 

Congratulations! You now can "speak commercial real estate".