Real Estate
Know your landlord
How to select a strong building owner that will help your bottom line
By Troy Sympson
Smart Business Miami | March 2008
Josh Gibbons
Senior Associate
Transwestern
Tenants often concentrate on high-level points such as location,
price and building status to guide their real estate strategies. However,
there are key elements that are often
overlooked by these corporate users
when it comes to their landlord, such
as their financial strengths, expertise,
experiences and their reputation with
like assets.
“Tenants often don’t give much thought
to who owns the building they lease
space in — that is, until something goes
wrong in either maintenance, management or expenses,” says Josh Gibbons,
Senior Associate of Transwestern South
Florida.
“Upfront due diligence from behind the
numbers can go a long way in minimizing the potential negative exposure for
tenants.”
Smart Business asked Gibbons how
a choice in ownership could affect the
bottom line of your business.
What is important to know about the ownership of your office building?
There are numerous reasons the ownership of your office building is instrumental in the analysis of a company’s
occupancy strategy, but perhaps most
important is ownership’s role in the way
a building operates.
The operation of a project includes
the services of leasing agents, property
management staff, engineers, architects, general contractors, attorneys,
accountants and risk management professionals. A sophisticated landlord not
only has a better understanding of the
unique value that each skill set brings to
the asset, but also can better allocate
the cost of these resources across multiple projects.
Inexperienced owners sometimes try
to combine, or even eliminate, some of
these cost items in order to improve
their margins to the detriment of the building operations and ultimately their
tenants.
How does the right management team
make the difference?
The property management firm is the
face of ownership; they are the ones
who oversee the general maintenance
and upkeep of the property. The
responsiveness and services of the
management team speak volumes
about the owner’s commitment, as well
as the working environment for tenants. For a prospective tenant, knowing how well a property is managed or
the attentiveness of the owner is difficult to assess in a 15-minute tour.
However, a couple of areas are good
indicators and can easily be checked,
starting with the upkeep of the parking
area/garage. The building lobby and
condition of the space and the bathrooms on a common floor are all good
areas of the building to examine as you
do your walk through.
What are some trends that owners and tenants will face in the next five years?
One interesting trend is the move
toward environmentally responsible
office environments. Metropolitan
cities throughout the U.S. are mandating or at least motivating owners and
developers to become more environmentally aware. The Leadership in
Energy and Environmental Design
(LEED®) for existing buildings provides an avenue for a property to position itself in a way that maximizes operational efficiency while minimizing
environmental impact.
While initial costs are incurred to
bring a building up to LEED® standards, tenants will benefit in the long
run in several ways. You could expect
to see energy savings, water use savings, and waste cost savings. Tenants in
green buildings often also see a
decrease in labor costs as a result of
less absenteeism, increased productivity, and overall higher worker satisfaction.
How does ownership affect a company’s
tenancy?
How a landlord operates a building
impacts the working environment for
your employees from satisfaction to
productivity retention. As a tenant, you
are making a long-term commitment
(typically five years) to occupy space,
and in essence, are ‘married’ to your
landlord once you sign the deal. An
untidy building that is poorly managed
can cost a business far more in employee turnover and expenses than a dollar
or two savings on the per-square-foot
rent. So before you lock into your next
lease, know your landlord’s history.
JOSH GIBBONS is Senior Associate at Transwestern in brokerage services. Reach him at josh.gibbons@transwestern.net or (305) 808-7318.
