Thursday, April 23, 2015

5 Questions You Should Ask Your Landlord Before You Sign a Lease

5 Questions You Should Ask Your Landlord Before You Sign a Lease

Touring office space and warehouse space is no easy task.  You probably only search for space when your lease is about to expire, which might be anywhere from once a year to once every ten years.  You are inherently at a disadvantage to your landlord, who does this for a living and might negotiate several lease agreements each month.

Wouldn't it be nice to have a list of questions that you need to ask every landlord?

As a landlord of commercial office space and industrial space, we have heard every type of question from prospective tenants.  Some questions catch us by surprise (“Can we paint the warehouse floor bright yellow?”) and some questions are to be expected (“What is the average monthly power bill?”). 

By no means could we provide an exhaustive list of every question you should ask. What follows is a list of 5 questions you must ask your prospective landlord to put yourself in a better position to make the best decision for your office space or warehouse space needs.  Just remember, there are no stupid questions.  If it is important for you to know the answer as a tenant, it should be important for your landlord to give a response.

     1.  Other than monthly rent, what additional charges can we expect?

You would be surprised with how many people do not ask this question.  As responsible landlords, we always reveal what additional charges there are before a lease is signed (even when not asked and even though such charges are covered in our lease).  However, before you can make an intelligent decision about an office space or warehouse space to rent, you need to have an accurate view of your additional expenses.

For example, Office Space A is advertised as $2,000/month which is inclusive of all utilities and internet.  Office Space B is advertised as $1,750/month but does not include anything other than the space itself.  If you don’t ask what additional charges you can expect to incur, you may be surprised by bills you have to pay for like internet, groundskeeping, water/sewer, waste disposal, power, etc.  A space advertised for less might end up costing more once you add in all the extra expenses.  You should probably create some sort of spreadsheet that itemizes the different charges so you know what your total monthly expense will be.

     2.  May we see a copy of your standard lease agreement?

Before you get too far into discussions and spend too much time negotiating back and forth, you should ask for a blank copy of a lease agreement.

Picture this scenario: You negotiate back and forth with your prospective landlord on the price and term of the lease.  Other items are discussed, such as property taxes and insurance.  The landlord tells you that the tenant is not responsible for property taxes or property insurance.  Several months pass and at last, you have reached a verbal agreement with your landlord.  And just in time, because your existing lease expires in 30 days.  Then, you get the lease form for signature.  Surprise!  Property taxes and property insurance are passed through to the tenant in the form of additional rent.  The landlord clarifies what was meant - the landlord pays the original bills in a lump sum and the tenant pays one-twelfth of the bills each month on top of the monthly base rent.  The landlord "thought" the tenant meant whether the tenant paid the actual property tax bill and was responsible for finding an insurance policy.  You formulated budgets based on a significantly lower monthly rent and cannot justify this additional expense for your business.  Meanwhile, you now have 30 days to move out of your existing space and find a different space to lease.  What now?!

This situation is not all that uncommon.  We have heard stories (more like nightmares) from our tenants about similar experiences with former landlords.  Thus, you should always ask for a copy of the standard lease agreement early in your negotiations.

And we think it is understood that you actually need to read the lease agreement.  And we mean every word of every paragraph in every section.  Landlords are sophisticated parties and each word of each provision is in the lease for a reason.  If you do not understand what something means, ASK!  And if the landlord is of no help, you might need to retain representation, whether it be an attorney or real estate professional.  Remember, your lease agreement is what will govern the relationship between you, as the tenant, and your landlord.  So if the landlord told you something that is not reflected in the lease, you need to address it before you sign.

     3.  May we take pictures of the spaces we tour?

Ask if you can take pictures of the office spaces or warehouse spaces you tour.  Not all landlords will allow you to take pictures (for various reasons).  We typically allow our prospective tenants to take as many pictures as they want (as long as we are not in the picture!).  Typically a prospective tenant only sends a representative to tour the space.  Pictures allow everyone in the office to review and brainstorm. 

And you never know what you might spot when reviewing the pictures.  People often wear blinders when they are touring a space that they have instantly fallen in love with.  Pictures allow you to take a step back and review them a day later, week later, month later, etc.  The pictures may show spots in the carpet you did not notice, stains in the ceiling tiles indicating a leak of some sort, you name it.  Not to mention, you will be able to do better space planning if you have pictures that show where electrical outlets, doors, windows, etc. are located.

     4.  How long has this space been vacant?

This question might give you some leverage in negotiations.  A landlord might be unwilling to budge on the monthly rent if a property is fresh on the market.  However, an office space or warehouse space that has been vacant for several months (or years for that matter) might go for less than the asking price.  Landlords like to keep spaces occupied because vacancies cost them money.  You might be able to squeeze out a better deal with this knowledge.

     5.  What is the process for repairs?

This is a bit of a loaded question.  First, it depends on whether the tenant or landlord is responsible for the cost of the repair.  Second, even if the tenant is responsible for the cost, the landlord might be responsible for performing the repair.  For the purpose of this question, let’s assume it is the landlord who is responsible for the cost and performing the repair for the HVAC system.  Your A/C or heat stopped working, (and trust us, the HVAC issues always happen in the hottest or coldest part of the year) and you call your landlord to notify them of the issue.

Does a form need to be submitted?  Does someone have to come take a look before making a call to a repairman?  How long until a representative is able to look at the problem?  How long until you, as the tenant, can call a repairman and bill it back to the landlord?  Basically, these questions all boil down to “How long until the HVAC is fixed!?”

Find out about the process for repairs.  While the lease will likely detail who is responsible for a repair, it will probably only give you a timeframe for how soon a repair must be accomplished if the landlord is responsible.  And when it is 90 degrees outside and your A/C stopped working, you want it fixed ASAP!
This is by no means an exhaustive list of questions that should be asked.  Every space in each location is different.  Different properties demand different questions.  One property by a railroad track might spur (pardon the pun) a question as to how often the trains run.  You might need to ask about noise levels near a manufacturing facility, fumes near a chemical plant, traffic near a major highway or flooding in a coastal area.  The list literally goes on and on.

As landlords, we would much rather a prospective tenant ask us one hundred questions than zero.  It shows that you are serious as a prospect and that you have done your homework.  We also like our tenants to know what to expect so that there are no surprises after a lease has been signed.  And like we mentioned in the beginning, there are no stupid questions.  If you think a question is important, we want to answer it for you and your landlord should too.
Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at or visit our website at  We provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  Please keep us in mind if you are looking for a space in our area.

Wednesday, April 1, 2015

Think Outside the Box to Succeed in #CRE

Think Outside the Box to Succeed in #CRE

Image courtesy of Master isolated images at

Thinking outside the box is a crucial skill for any #CRE professional.  This holds true for landlords, tenants and brokers alike.  There is not a playbook for every situation.  Sometimes, it pays to attack a real estate deal from a different angle.  And at times, all that is required is one crucial skill: listening.

Let us give an example.  In late 2013, our office received a call from a prospect looking for office space.  They had outgrown their space and were looking to expand their footprint by about 20-30%.

The main problem (for us and other landlords alike) was their existing landlord was giving them a pretty sweet deal.  The landlord was allowing them to extend their lease on an annual basis and was not increasing the rent.  They were even allowed to cancel the lease at any time, giving them no immediate incentive to move out because if they found a new location in the middle of their term, they could give notice to vacate.  Their rent had not increased since they moved in several years before.  Thus, the tenant was anchored in their thinking that the rental rate was comparable to the rest of the market (it was not).  They also felt that because they only needed 20-30% more space, their rental rate should likewise increase by about 20-30%.
Like we said, this tenant was getting a really sweet deal and was not going to be rushed into signing a new lease agreement.

When this prospect first contacted us, we had an office space that had just become available.  The space was a little bit larger than they required.  However, trying to make the deal work to get started with a new tenant, we priced the office space so that the rental rate was comparable with some of our smaller spaces.  The prospect said, “Thanks, but no thanks.”  That price was way more than they were willing to pay.

This was also not a small tenant.  They had been in business in our local area for about 20 years and had an established, reputable business.  And they were not strapped for cash; in fact, they had plenty of cash reserves to move to any office space that they wanted.

After several months, we heard from this same prospect again.  The previous space we offered was leased at the time, and we had a smaller space available.  We went through the same ordeal.  We priced it aggressively and were told, once again, “Thanks, but no thanks.”

Another six months passed by, and wouldn’t you know it, we heard from the prospect a third time!  At this point, the business owner realized that their current rent was a good deal but they were still unwilling to pay much more than their current rental rate.  We told them our vacancy and applicable rates.  “Thanks, but no thanks.”
This was very frustrating for our company.  We felt that we had done everything we could to make the deal work.  We had showed them a few vacancies over a 12 month period and priced each office space very aggressively.  Again, we wanted to get started with this new tenant because they were a good fit for our business park.  However, we could not come to an agreement.  We told ourselves: That’s just business; not every deal is going to work.

Then, one of the members of our team got creative.  We went through their space requirements.  This was not a tenant that needed any kind of fancy office or any type of storefront.  In fact, this was part of the reason that our office spaces were priced too high (our offices are in brick buildings and have a storefront look to them).  Rarely did customers come to the tenant’s office.  And the occasional customer that came by was not going to care what the outside (or inside for that matter) of any office space looked like.

We had an office/warehouse that pretty much met their office requirements exactly.  Sure, it was 50% office and 50% warehouse, but we thought it might work well for them because they could use the warehouse as storage and maximize use of the office space.  Our office called and proposed this scenario.  The business owner came out and fell in love with the space.  This was a cost-effective manner to get them into our business park because our office/warehouse space is commonly less per square foot than pure office space.  This was the ultimate win-win scenario.  And it all came from listening to the space requirements, the business type and clientele.

One month later, a new long term lease was signed.  The warehouse is being used as a break area and for file storage.  The office is being fully utilized and gave the tenant some room for growth.  Win-win.

You see, the tenant told us they wanted office space so we only thought about our office buildings.  We had to think outside to box and really listen to their space needs to come up with this solution.  Sure, this will not work for every tenant looking for office space (or even most tenants looking for office space).  Most tenants for office space need a presentable office for clients.  They want and need the brick and/or glass building.  But this tenant was able to go into an office/warehouse and solve all of their space needs at a rental rate that suited their needs.


Every situation does not have a script.  Most leases are pretty straightforward: Tenant needs office or warehouse space.  Landlord has office or warehouse space.  Tenant and landlord come to terms and sign a lease agreement.

However, not all transactions are cut and dry.  Sometimes, you must get away from your normal line of thinking.  We cannot provide a list of different items to be mindful of when thinking outside the box (after all, then it would not be thinking outside the box).  For the above example, it involved listening to our tenant’s wish list for space requirements and coming up with a unique idea.  If you get to a standstill or are unable to come to terms with your tenant or landlord, take a step back.  Try to attack the problem from different angles.  You might be surprised at what will work for both parties involved.

You can email us with any questions or comments at  As a reminder, we provide office space and office/warehouse space in Gulfport, Mississippi.  For more information, visit our website at or call us at (228) 575-7731.