Al Twainy, CCIM
Office Phone:
(702) 255-5555
Cell Phone:
(702) 400-2001
Office Fax:
(702) 367-9587
Twainy Associates
101 Convention Center Drive, Suite 1002
Las Vegas, Nevada 89109
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Commercial Services
Areas of
commercial/investment
specialization are as
diverse and far-reaching
as the Twainy network
itself. Among the
services available
through the Twainy
Commercial team:
Office
Whether you are buying,
leasing, selling or
building, Twainy
Commercial services can
help you make timely,
cost-effective
decisions.
Up-to-the-minute market
analysis will reveal the
best space and location
in a lease or purchase.
In a sale, you will
receive maximum return
through a marketing plan
grounded in a solid
understanding of all
pertinent market data,
including the status of
active leases and the
level of improvements
and amenities in
comparable properties.
Industrial
A thorough and timely
comparative analysis of
properties will reveal
the best option for
purchasing, selling or
leasing industrial space
based on: local and
regional economic
conditions;
transportation access;
work force capabilities;
and myriad other
variables that can
affect specific
properties and/or
businesses.
Retail
Stand-alone sites,
downtown storefronts,
multiuse complexes,
strip centers, new or
transitional malls,
big-box power centers -
whether located in a
single market or across
the continent - demand
complete knowledge of
demographic trends,
traffic patterns, and
growth projections. The
Twainy Commercial team can
quickly compile and
analyze the information
you need to achieve
maximum value in any
retail transaction.
Land
Whether for investment,
long-term growth needs
or immediate use, a
vacant land transaction
always hinges on
obtaining an exact
accounting of a
property's history,
future uses and status
in relation to current
trends in local and
regional government
planning. Twainy
Commercial specialists,
through experience and
market awareness, can
supply the guidance
needed to ensure timely,
successful transactions.
Investment
From working with a
single-property
individual investor to
advising an
institutional investor
with a diverse portfolio
of holdings, Twainy
Commercial practitioners
are prepared to quickly
and competently
structure acquisitions
or dispositions that
meet your
return-on-investment
requirements.
Advisory
Services
If you are a
small-business owner
deciding between
leasing, buying or
building - or an
investor contemplating
an exchange; or a major
corporation in need of a
creative way to bring
real estate costs under
control - the Twainy
Commercial team can find
solutions. Services
include: acquisition;
disposition; asset
management; valuation;
financial analysis;
lease audits; occupancy
costs analysis; and
developmental services
such as concept design,
site location and
feasibility, permits and
approvals, bidding,
construction and
financing.
Auctions
Often overlooked as a
means for disposition of
property, auctions can
serve as a highly
effective approach to
maximizing return on
certain properties and
within certain markets.
The opportunity to
consider an auction
among your options is a
powerful example of. the
Twainy Commercial team's
focus on maximizing
value
Business
Brokerage
Whether tied to a real
estate transaction or
not, the acquisition or
sale of a business can
be effectively handled
through the Twainy
Commercial team - with
the focus always on the
results you need.
Commercial
Leasing Information
Lease Types
FULL SERVICE
LEASE
Lease used almost
exclusively for
multi-tenant office
buildings, a full
service lease is a
situation where
everything is included
in the rent. The
landlord pays all of the
property's operating
expenses including
maintenance, taxes and
insurance. In this type
of lease the landlord
typically provides the
following services:
• Utilities
including water,
electricity, heat and
air
• Janitorial
services
• Maintenance
services
• Security
services
Note: When using a Full
Service Lease in a
typical multi-story
office building, the
Tenant will be
introduced to the
concept of Load Factors.
A "Load Factor" becomes
necessary when the
Tenant uses a certain
square footage inside
their offices, but also
shares in the hallways,
bathrooms, elevators,
lobby, etc. Therefore, a
calculation is done to
determine how much of
the building's space is
devoted to these common
areas, and that "Load
Factor" is added in to
the Tenant's square
footage. In other words,
if twenty percent of the
building is devoted to
common areas, then
twenty percent more
footage is added to the
Tenant's "usable" area.
MODIFIED GROSS
LEASE
In this type of lease
the tenant pays the
landlord a gross amount
for rent, plus sales tax
where applicable. The
landlord then pays the
property's operating
expenses such as
property taxes,
insurance, management or
maintenance costs from
the income he receives.
The Tenant may be
responsible for
electric, telephone, and
possibly water & sewer
charges depending on the
verbiage of the lease
document. This type of
lease is more common for
office users or in older
buildings where
utilities may not be
separately metered.
With some modified gross
leases, the landlord may
put an expense stop
provision in the lease.
In this type of clause
the tenant pays the
excess over a specified
ceiling on operating
costs. For example, the
owner of an office
building may require
tenants to pay for
heating and air
conditioning if costs
exceed $1.25 per square
foot as well as any
increases in taxes over
the base year.
NET LEASE
Most common with today's
commercial properties,
the Net Lease directs
the tenant to pay the
landlord a "Base Rent"
which is net of property
expenses, PLUS an
additional amount for
tenant's share of the
property's expenses such
as property taxes,
insurance, common area
maintenance (C.A.M.),
management, etc. Many
times this is referred
to as a "triple net"
lease in reference to
base rent being "net"
of: (1) Property taxes
(2) Insurance (3) Common
Area Maintenance
CERTAIN TERMS IN
THE LEASE
The incentives offered
by a landlord depend on
the softness of the
rental market as well as
the financial strength
of the tenant. Landlords
will only offer
incentives when
absolutely necessary. As
the rental market gets
stronger and more space
is absorbed, incentives
will tend to decrease
RENTAL RATE
Negotiating the best
possible rental rate is
probably the single most
important item to most
Tenants and can be one
of the easiest assuming
the proper research is
done!
YEARLY RENT
ADJUSTMENTS
During the initial lease
term, the landlord may
offer a fixed rate over
the term of the lease or
offer yearly
adjustments. Rent can
either be adjusted by a
dollar amount, a fixed
percentage or tied to a
fixed index such as the
Consumer Price
Index(CPI).
TERM
The length of the lease
is usually a very
important issue. Some
Landlords may want a
long lease for financial
stability, others may
prefer a short lease
because of hopes that
rental rates may rise in
the short term future.
Tenants may want a short
lease in case of a
decline in their
business, or if their
business becomes more
profitable and they need
more space for expansion
purposes. Other tenants
may want a LONGER term
lease because of their
large investment in
tenant improvements,
amount of money spent
advertising a new
location, as well as
moving costs if their
lease isn't renewed.
Depending on what the
landlord wants, the
length of the lease will
effect all other
concessions offered.
"KICK-OUT"
CLAUSE Also
known as a Lease
Termination Clause, some
Tenants may want to
build-in an option which
would allow them to pay
the Landlord a penalty
fee and cancel the
lease. A Tenant may
anticipate future
expansion or fear that
this location may not
produce profitable
results for the
business. The tenant may
also fear that the
anchor store may leave,
thus significantly
reducing traffic flow.
Without this clause, the
landlord could sue the
tenant for all future
rents due for the entire
length of the lease.
This clause can make it
less costly for the
Tenant, who could then
pay a set penalty fee
and move out.
TENANT BUILD OUT
ALLOWANCE
Commonly referred to as
"Tenant Improvement
Allowance" ("T.I.
Allowance"), this is the
amount of funding the
Landlord will give to
the tenant to reimburse
the tenant's cost of
finishing the interior
improvements.
NOTE:
Many times the Landlord
will refer to providing
the Tenant with a
"Vanilla Shell" or
"Vanilla Box". Since
each landlord defines
the meaning of a vanilla
box differently, the
tenant may want the
definition of the
vanilla box spelled out
in writing. Generally
speaking however, the
term "vanilla shell"
means the Landlord is
providing the space with
four walls ready for
paint, concrete floor,
ceiling, lighting,
bathroom, standard
electrical, plumbing and
HVAC systems. This would
NOT include floor
covering, wall covering
or any interior
partitions.
PERSONAL
GUARANTEE
For startup businesses
and those with limited
assets, landlords may
require that the tenant
personally guarantee the
lease. Usually the owner
of the business acts as
personal guarantor. By
guaranteeing the lease,
the owner can be sued
personally by the
landlord upon default by
the tenant.
OPTIONS
Options benefit the
tenant, not the
landlord, since the
tenant can choose
whether he remains in
the building or locates
elsewhere. Rather than
sign one ten year lease,
the tenant could sign a
five year lease with one
five year option. The
more options, the more
flexibility the tenant
has in deciding whether
to stay or leave.
For the same reason,
landlords prefer limits
on the amount of options
offered because it gives
them less control of
their property. Some
landlords will not give
options at all for that
reason, but insist on
negotiating a new lease
at expiration.
NOTIFICATION
Usually there is a
notification period
prior to lease
expiration in which the
tenant must notify the
landlord if he intends
to exercise the option.
Many times a
notification period
ranges from three to six
months. The purpose is
to give the landlord
time to start leasing
the space if the tenant
vacates.
Common
Leasing Mistakes
#1 MOST COMMON
MISTAKE
HIRING THE WRONG
BROKER OR USING NO
BROKER AT ALL
Unless someone in the
company is already an
expert in commercial
real estate, most
business owners cannot
(and should not) take
the time to learn this
new industry.
A good Tenant Rep
counterbalances the
Landlord's team of
professionals, and is an
important source of
market knowledge and
negotiation expertise.
The wrong broker may
provide incomplete
information, or have
conflicting loyalties
because of hidden
agendas or Landlord
relationships.
Since commissions are
paid by the Landlord on
virtually all
transactions whether or
not the Tenant is
represented,
knowledgeable companies
retain an experienced
professional to
represent their
interests.
(A similar mistake is
when Tenants fail to
keep their broker
involved in the
expansions,
contractions, renewals
and extensions that
occur during the lease,
resulting in uninformed
decisions and lost
opportunities.).
2nd MOST COMMON
MISTAKE
BEGINNING A
SPACE SEARCH WITHOUT
DETERMINING BOTH CURRENT
NEEDS AND LONG TERM
PRIORITIES
Current needs include
evaluating square
footage requirements
(how many rooms and what
size), type of floor
plan (open, private, or
a mixture),
communications needs,
parking needs, access
and security needs, etc.
Long term planning
includes obtaining
facilities and lease
terms, which allow
companies to expand,
downsize or relocate as
circumstances dictate
the company grows or
shifts products and
services. (See "Future
Flexibility" below)
Suggestion: Start
the market research and
facility search after
meeting with leasing
experts and space
planners/architects and
after decisions have
been made regarding
office layouts, modular
furniture, hoteling,
size and amenity
requirements, etc.
3rd MOST COMMON
MISTAKE
WAITING TOO LONG
TO START THE EVALUATION
PROCESS
Market research,
facility inspections and
analysis can usually be
completed in a week or
so by highly motivated
companies, which are
already familiar with
the local market.
However, even after a
location has been
targeted, negotiations
with the Landlord and
legal preparation of the
documents can take
weeks, even months
depending on the
Landlord, attorneys and
corporate bureaucracy
(Landlord's and
Tenant's).
After the Lease is
finally signed (and
assuming the space is
not going to be taken
as-is) architectural
plans need to be
completed (1 -2 months),
building permits need to
be obtained (1 - 2
months, depending on
local government
policies and
requirements) and then
the actual build-out can
get started (1 - 2
months, average).
If existing facilities
cannot be found which
are acceptable, then a
ground-up Build-to-Suit
needs to be performed,
which can easily take 9
to 12 months or longer.
Lease vs.
Purchase
Which is best?
When a company has the
option of purchasing a
property or leasing, a
careful analysis may
need to be performed to
determine the best
choice. While some
business owners feel it
is obvious that
purchasing is better
(after years of monthly
payments they could have
OWNED the building), it
isn't always that
simple.
Specifically, the Lease
Vs. Purchase decision
must be made relative to
three prime
considerations:
1) OPPORTUNITY
COST - This
cost relates to the
alternate choices given
up because the Tenant
decided to purchase a
facility. The most
typical Opportunity Cost
would be a decrease in
inventory or equipment
the business owner faces
because of the need to
use available cash for a
down payment. If the
business owner can make
higher profits using the
cash differently, then
that factor must be
taken into
consideration.
2) CASH FLOW -
Most businesses run on
cash flow and are valued
based on Cash Flow. It
would be unfortunate if
a business owner
purchased a property
because of $100,000 in
an expected increase in
property values, and
then lost $500,000 in
the sale of the business
because of reduced sales
volumes caused by
reduced inventory,
equipment, training,
plant modernization,
etc.
3) RISK -
Finally, risk is an
integral part of owning
real estate. Are values
increasing or declining?
If they are increasing
currently, will they
continue to increase
over the life of the
investment, and will the
property be worth more
than the amount invested
in it? What are the
chances of your business
needing to expand,
contract or relocate? Is
it easier to accomplish
while renting or owning?
Each individual business
will have vastly
different circumstances
relative to the above
considerations, however
the following procedure
will serve as a rough
guide. (To be completely
accurate, an owner would
have to project an
eventual re-sale price,
costs of sale, mortgage
principal reduction, tax
bracket, etc.)
To avoid
other common
mistakes or
if you are
looking for answers
to your real estate
questions contact
Al Twainy. |
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