lease biz bldg (1)
DESCRIPTION
TRANSCRIPT
7/13/2011
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Welcome!How to Lease a Business Building
www.BECSanDiego.com
www.SanDiegoSmallBiz.com
Presenter: Regina P. Brown
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Overview
• Plan your needs
• Locate, Select, and Evaluate Bldg.
• Contract and LOI
• Budget and Costs
• Moving In
• Terminate Lease
• Forms and Resources
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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About Me:
• Real Estate Broker’s license 20 years
• Service all of California
• Residential, Commercial, & Property Management
• Entrepreneur who loves to help other professionals & small business owners
• Love the SBDC!!!
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Some Major Issues:
1. Commercial vs. Residential
2. Complexity
3. Goodwill
4. Types of Landlords/Owners
5. Biggest Challenge for
Small Businesses
6. Explore low-cost Choices
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Your Needs Checklist:�Type/Use
�Retail
�Comm./Industrial/Warehouse
�Restaurant
�Office
�Medical
�Square Footage
�Budget
� Location/Signage/Parking/Accessiblity
�Customers/Employes (demographic)
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Hire a Broker & Locate Bldg.
• Broker Benefits
• Searching for Buildings Online
• Checklist of Needs
• Research
– Traffic count
– Demographics
– Zoning/Uses
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Select & Evaluate Bldg.
• Condition
• Security
• Amenities
• Noise
• Floor plan/Build out/Future expansion
• ADA compliance/Accessibilty (roads)
• Hours of Operation
• Allocation of Space
• Class A, B, C
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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“Due Diligence” (Research)• Sign regulations
• Government permits
• Property profile: Mortgage/Taxes/Liens
• Talk to other tenants
• Contractor/Designers/Architect
• Franchise requirements
• Delivery Access
• Insurance13-Jul-11 Leasing a Business Building
Copyright © 2011 R.P. Brown
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Contract / Letter of Intent (LOI)
• Types of Leases
• Clauses– Rent, increases (escalations), NNN, Deposit
– Personal guarantee
– Exit clause / termination
• Incentives (abatement)
• Square Footage (usable space)
• Begin & end dates/renewability
• TI (tenant improvements)
• Signage/Parking/Amenities/ Advertising
• Commissions13-Jul-11 Leasing a Business Building
Copyright © 2011 R.P. Brown
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Qualifying Criteria for Contract
• Complete Application– ID
– Business License
– Credit Report/ D&B
• POF (bank statement)
• Corp. Minutes
• Franchise Approval
• Other: co-signer/collateral/reference check
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Budget/Costs� Broker (usually paid by Landlord)
� Attorney
� TI (tenant improvements) = build out• Architect
• Designer
• Contractor
� Signs
� Permits
� Deposit + 1st Months Rent
� Furniture and Fixtures
� Equipment
� Inventory13-Jul-11 Leasing a Business Building
Copyright © 2011 R.P. Brown
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Calculate Total Rent(does not include NNN fees)
Year # Rate per
sq. ft.
Usable
Sq. Ft.
Monthly
Rate
Months Annual
Rent
1 $2.25 2,500 $5,625 7 $39,375
2 $2.32 2,500 $5,794 12 $69,525
3 $2.39 2,500 $5,968 12 $71,611
4 $2.46 2,500 $6,147 12 $73,759
5 $2.53 2,500 $6,331 12 $75,972
6 $2.61 2,500 $6,521 5 $32,605
6 Free 2,500 $0 6 $0
• Terms: 5 year lease + 6 mo. free = 66 months occupancy
• Base rent: $2.25 / sq. ft. + 3% annual increases, compounded
• Total consideration $362,847 ÷ 66 mo. = $5,498/mo. ÷ 2,500 sq. ft. = $2.20 sq. ft. (Effective Rate)
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Plan for Success!
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Timeline• Select Broker Day 1
• Receive Property Search Day 1-3
• Tour the Market Day 5-10
• Secondary Tour (if necessary) Day 10-15
• Submit LOI / Proposals Day 17
• Counter Proposals Day 22
• Lease Draft / Revisions Day 25
• Lease Execution Day 35
• Tenant Improvements/Build Out Day 55-115
• Move In/Lease Commencement Day 116
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Moving In• Permits
– Health department
– Weights and measures
– City business license
– Sign permits
• Signs
• TI (tenant Improvements)
• Resale License (CA Board of Equalization)
• COO (Certificate of Occupancy) if new bldg.
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Termination/Moving Out
• Last Month’s Rent
• Security Deposit
• Clean-up
• Check out
• Disposal of equipment, furniture, fixtures, etc.
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Questions?
???
Email me:
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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Regina P. Brown, Broker
(760) 804-9275
www.CalCoastCountry.com
www.BrownBiz.net
www.RealtyProAcademy.com
THANK YOU!
13-Jul-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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