#CRE Problem? Try This. TUESDAY Traffic Tips

Today, I discuss a method for solving problems. This method is practiced widely by our younger counterparts. Why? Because it works! Try it. You won't be disappointed. This and much more on this week's VIDEO Tip.

Unrealistic #CRE OWNER Expectations. TUESDAY Traffic Tips

Happy Birthday to my friend David Newton! Today, I discuss a way to get your commercial real estate owner's expectations in line with the market. This and so much more on this week's VIDEO Tip.

With an EXPIRING Lease, you'll make ONE of TWO Decisions

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Today, I want to discuss your commercial real estate lease agreement - you know, that twelve page document you gave a cursory review before you signed your John Hancock - the legal sized occupant of your bottom desk drawer - that tome you swore you would review at the beginning of the year and didn't - and here we are.

The goal today is to make sure the decisions are yours to make and not foisted upon you by the owner of your building.

When your lease expires you will make one of two decisions - you will stay or you will move. Let's do a deeper dive into both decisions, shall we?

You have decided to stay. Do you have the right to stay? In other words, does your lease contain an option to renew? If you don't have an option, have you spoken with the owner of your building to see if another lease is in his plans? Let's presume your lease has an option to renew. Most options contain time frames which are sacrosanct. You have a specific period of time in which to exercise the option - your desire to stay put. If you miss the exercise window, you may not be bounced, however, those carefully negotiated option terms may no longer be in force. With no option to extend, you should determine well in advance of your lease expiration your desire to renew. Engage your owner early - 12-18 months before your lease expiration and craft a renewal agreement. In the event, your owner has another idea - he's decided to sell your building and not renew your lease - you have adequate time to look for a new home for your business.

A move is in your future. The business has eclipsed all growth projections and the only way to continue the upward sales trend is to relocate to a larger building. Should you look for something to buy or should you consider a lease on a larger building? Two pieces of advice, here. Allow plenty of time to look at buildings, arrange financing (if you are buying), and lose a couple of negotiations. And, engage great help to shepherd you through the maize of commercial real estate availabilities. Unlike residential availabilities, commercial availabilities are not widely viewable on line. Sure you can scour LoopNet, however, LoopNet is designed to give you just enough information to prompt a call to the owner's broker. You really can't rely on the available data contained and the information is not readily searchable - especially if your operation requires a special feature such as an abundance of office space.

Is there a third decision? Absolutely! You can opt to do nothing, allow your lease to expire, and continue on a month-to-month basis while you plot your future. The problem with this strategy? Generally, commercial leases contain nasty little creatures called "holdover" provisions. Your owner has the right to increase your rent by as much as 200% if you occupy the building past the expiration. Some owners are adamant about imposing these holdovers - so beware! Without a lease in place, your owner can sell the building to an occupant who will soon be sitting in your office while you are loading the moving van - it happens! If you find yourself in a quandary, I would suggest renewing your lease for a short term - one year - until you get the space requirements figured out. If your owner will do this, you will save a innumerable amount of money and avoid a forced move.

The OFFICE is NOT your Friend. TUESDAY Traffic Tips

Today, I discuss how much of your day should be spent in the office. This and much more on this week's VIDEO Tip.

Backup Position in a Commercial Real Estate Deal...Now What?

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Recently, I discussed how a seller should handle multiple purchase offers on a parcel of commercial real estate.

Key to a seller managing multiple offers - assemble the due diligence information before taking the property to market, make sure all of the buyers are operating with the same set of facts, be transparent when dealing with buyer's brokers, create a spreadsheet with all of the offers and note the differences, choose not one, but two buyers.

Today, I want to discuss how a buyer should behave if in back up position. Back up position is first loser, however back up position is a consolation prize of sorts. If the original buyer fails to perform, you get the nod as the back up buyer. Below are suggestions to maximize your position as the bride's maid.

Get your back up position in writing. If the seller of your dream building truly is allowing you to be in back up position, he should be willing to create a contingent contract with you. The contingency is the failure of deal number one. If deal number one fails, then the seller pivots to your deal. I would discourage a verbal agreement that places you in first place in the event the original deal craters. This structure is an agreement to agree and affords you nothing.

Conduct your due diligence simultaneously with the original buyer. Most contracts to purchase commercial real estate include a contingent period of time for the buyer to obtain financing, inspect the building, and review the title report among other things. During this "contingency period", the buyer has the right to disapprove items not satisfactory and ultimately cancel the transaction if something untoward is discovered. I counsel buyers, in back up position, to conduct their inspections as if they are the original buyer. On the one hand, the back up buyer may be wasting his time - if the original buyer performs. However, if the original buyer changes course, asks for a price reduction, requests more time, etc, the seller will be more prone to reject the original buyer's requests in favor of the back up buyer.

Stay in touch with the seller of the property. Know the original buyer's transaction dates. When is the original buyer to waive contingencies? A weekly call or email is in order to track the original transaction's progress.