By Nate Bernstein, Esq.
We are all aware that at the end of a lease term, a commercial tenant frequently wants to extend the term of their stay based on rights pursuant to a lease option.  A tenant may have built a successful business at the location with a loyal customer base, and has developed “goodwill” that may be lost if the tenant has to move to a different location.  Tenants guard lease options like a treasure chest.  The question is whether the option terms will be enforceable.

A commercial landlord who agrees to an option to renew or extend the lease will generally require the tenant to pay a higher amount of rent during the extended lease term.   This is consistent with factors such as inflation, and increased business costs of the landlord.  The tenant wants to have no increase or a very nominal increase.  The tenant may argue that since the leasing market has collapsed due to the poor local and national economy, that an increase is not warranted.  The fact of the matter is that commercial landlords can protect themselves from leasing market downturns by specific language in the option agreement that will assure rent option increases based on a specific standards and methods of calculation.

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By Eric Paulos

Whether you remodel, make structural changes to an existing building, or take the plunge to develop a residential building from the ground up, there are several important insurance considerations:

The standard commercial building insurance policy will not adequately cover the construction operations. Standard package property and liability insurance policies for commercial buildings are designed for your normal day to day leasing and ownership operations. There are many exclusions within policies and many insurance companies will refuse to provide standard coverage for commercial buildings where it is known that remodeling or construction is about to occur.

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Commercial Real Estate investing is undoubtedly an acquired intelligence that often takes years of experience to understand. Most commercial investors will quickly admit the right property can yield progressive long-term returns but one must properly assess the multitude of variables associated with the investment. One important variable that is often miscalculated in determining the return on your commercial building is properly allotting C.A.M. (Common Area Maintenance a.k.a. Triple Net Charges) to your commercial tenants. This article will hopefully help each investor to realize the importance of such charges and assist in properly negotiating such charges into your next lease.

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When your commercial shopping center tenant wants marriage yet you still want to see other tenants!

I once heard someone use the comparison that Commercial Leases are similar to marriages. This may be true if your pre-nuptial agreement involves a set term, hours of negotiating, and enough legal jargon to ensure your attorney heads for an early retirement.

In negotiating any Lease it is imperative to know the consequential effects of each clause that is being requested or permitted. One such very important clause which is often under analyzed is the Exclusive clause (a.k.a. exclusivity clause).

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Here is some questions and answers by one of our legal writers, Stephen C. Duringer. It is written specifically for issues that face commercial property owners, so we hope you can find benefit from his advice. We hope to continue to blog additional intelligent and relevant content in the future.

Question
I am about to enter into a five year term lease for an industrial unit in Southern California. The unit has been vacant several months and I don’t want to lose this deal, seems like good tenants are kind of few and far between lately. We’ve agreed on just about all of the deal points except a couple. At the last minute the tenant requested the lease be prepared with a subsidiary of his company rather than the parent company, saying it’s for ‘tax reasons.’ Additionally, he wants to make the use provision extremely broad rather than specific allowing him to do just about anything in the premises without having to get my permission. He knows I need to lease the space, but I’m not sure I want to give in on these points, what are my options?

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We are pleased to announce that our premier issue is about to go to print. Next month, February 2009, Apartment News Publications will release the first issue of Commercial Property Management.

Commercial Property Management Magazines will be released first in Western Los Angeles. We are excited that we can release a commercial property magazine in such a big market, where the commercial industry is continually developing and the rest of the nation looks to first. We hope that in this economic crunch, our editorials can point out ways to push innovation and expansion, and that our advertisers will offer their money-saving services that help you cut your costs.

If you are interested in advertising, make sure you call us at (714) 893-3971 to speak to an Account Executive.

If you are interested in receiving our magazine, email me at js@cpmmags.com to start receiving Commercial Property Management.

We are pleased to introduce our newest publication, “Commercial Property Management Magazine”. You’ll find the magazine continues the same mix of feature articles and vendor advertisments that has driven the success of “Apartment Management Magazine” over the years.

We are just getting started – so keep a close eye on this website!