Whether you’re launching a new business, expanding an existing one, or simply need to move locations for one reason or another, you’ll need to decide whether to lease, buy, or build a property. And with current construction lead times, it’s important to make this decision early on. If you don’t, you could be in for a long wait before you …
Being a landlord and property owner is not for the faint of heart, and this is especially true amid the COVID-19 crisis. There is hope and solutions available to meet the challenges facing many property owners in today’s landscape. The team at Cerron Commercial Properties & Appro Development has prepared a list of action items and a summary of tools you can use to navigate these uncharted waters.
How a landlord can respond
As businesses across the country close their doors in compliance with the response to the COVID-19 pandemic, we are starting to see tenants approaching landlords about their rents. If a business if forced to shut their doors, even temporarily, they are having a hard time generating the revenues they once did, and therefore cannot produce rent. In turn, the landlord may have a difficult time paying the mortgage (if there is one), or taxes, or any of the other costs associated with building ownership. No one wants to be in this situation, and all feel the hardship. According to a recent article published by the CCIM Institute, “Guidance for Rent Relief Requests and Other Commercial Real Estate Tenant/Landlord Issues” a variety of options are available for the landlord to implement in situations like the COVID-19 crisis. You may want to consider these options.
The landlord can reduce the tenant’s rent for a portion or all of the term left on the lease. The usual forms of rent reduction are to reduce the base rent, operating expenses, or both. In regard to retail, it is possible to convert base rent to percentage rent.
In this case, the landlord can defer a portion of the tenant’s rent but would require them to repay the rent deferred at a later time, either in a lump sum or by increasing subsequent payments. A variation of rent deferral could be to cap or set a base year to operating expenses for a short or extended period of time.
If a tenant is significantly past due on rent payments, a landlord may agree to forgive a certain amount of the past due rent if the tenant remains current thereafter.
Rather than abating past due rent, a landlord may agree to convert the past due rent into a loan payable over time. The tenant would, however, continue to pay the current rent. The loan is then evidenced by a promissory note that is cross-defaulted with the lease.
Application of Deposit
If the landlord holds a deposit, this amount could be credited against the tenant’s current obligations.
Bringing in a new tenant (for part of or all of the rented space) could reduce or eliminate the rent obligations while replacing revenue for the landlord.
Data Source: https://www.ccim.com/rentrelief/?gmSsoPc=1s
*** Keep in mind – a landlord giving any of these concessions should surely be given some consideration as well – so an extension of the length of the lease term is often considered.***
Additionally, we have discussed this situation with many of our clients who own properties and have started a proactive approach to having a conversation with their clients. Some have sent letters to tenants stating some of the following:
- Acknowledge the times we are dealing with and their value as a tenant
- Offer solutions, which may include discussions with their insurance company – possible business interruption insurance and similar experts in their team of advisers
- Include summaries provided by local Chambers of Commerce or municipalities
- Discuss what you as the landlord are doing to try to minimize your costs
- Request that the tenant, after exhausting all options (government programs, savings, lines of credit, etc.), provides documentation to explain their situation
These times are indeed challenging, but as with all successful relationships, keeping the lines of communication open and respectful can be the key to navigating these tough conversations.
The following are a few additional resources you may find helpful as you work with your tenants.
- Seven Steps to Lease Renegotiations
- SBA Coronavirus relief options available
- Small Business Owners Guide to the CARES Act
Our team is available to help in any way we can. Please contact us with any questions, comments or concerns you may have!
Image Credits: Business person with key and business owner in shop via Shutterstock.
Disclaimer: Appro Development, Inc. and Cerron Commercial Properties, LLC have compiled the above information from multiple sources and make no warranty or representation regarding the information shared above. You and your tax, and/or legal adviser(s) should conduct your own investigation and research regarding the best course of action for you and your unique business.
Bruce Rydeen named a Top 2013 Power Broker
The team at APPRO and CERRON is excited to share that Bruce Rydeen has been named a Top 2013 Power Broker! Bruce is a valued leader in our organization and works with clients in all commercial property types, including: industrial, manufacturing, office, retail and land. This particular award is presented to Top Deal Makers in Commercial Real Estate.
Bruce is honored to have received this award specifically for his work in the Industrial category for the Minneapolis market of Minnesota.
Additional information about the Top 2013 Power Broker Awards, can be found via the following links:
Top Commercial Real Estate Firms and Brokers article – Costar
List of 2013 Top Brokers (see Bruce under Top Industrial Leasing Brokers)
Our sincerest gratitude to the Costar Group for recognizing Bruce’s hard work and congratulations to Bruce from the entire team at APPRO & CERRON!
We would love to bring our award winning expertise to your next commercial real estate project. Give our team a call to get started today!
Learn more about the industrial construction process and how our team can help you navigate the process.
Thinking of selling your commercial property without a survey and title work? You may want to reconsider. Many of my commercial real estate deals in 2016, ended up having an unforeseen issue related to the title or the results of the survey of the property. Many of these issues could be resolved at the time of listing the property, rather than after a deal has been put together. By having these essential steps complete prior to listing the property, a whole lot of time and energy could be saved – not to mention alleviate potential headaches for both buyers and sellers.
So, what is involved in obtaining title work on a commercial property?
It starts by working with a reputable title insurance company. Our brokerage has been fortunate to work with a variety of very good title insurance professionals over the years, and certainly would be happy to recommend a few. By requesting a title commitment before, or at the very least, at the time of listing, issues like liens, covenants, easements, restrictions, and more, can be identified and rectified as required. Examples of title reporting may include: Errors in the recording process; or paid-in-full mortgages may appear as a lien on the property awaiting a recorded satisfaction. It is not uncommon for individuals who came into ownership (e.g. estate) may not know “what” they are selling, and therefore may not be aware of many of the possible issues on the property – a title report can help to shed some light. As of the writing of this post, ordering title work from a commercial title insurance company can run $600.00-$750.00. This is one step that can significantly aid in streamlining the sale of a property.
Obtaining a survey is similar in terms of working with a reputable provider.
By obtaining a survey — and ideally on a commercial property, an ALTA (American Land Title Association) survey — you will better understand the parcel being sold. In the past few years of our commercial real estate deals, a survey has been able to catch an encroachment of a fence on an adjacent property onto the property being sold. Another example is of a property that was eventually held by a bankruptcy trustee and multiple areas of encroachment were found upon a full survey being conducted. As of the writing of this post, an ALTA survey will typically run between $3,000 and $4,000, and take several weeks to complete.
Our team hears comments all the time including: “I have always owned this property, I really don’t need to obtain title work,” or, “An ALTA survey is really expensive, can’t I just get a boundary survey?”, or similar comments. Unfortunately, we see what happens when these essential reports are not completed and investigated in advance. At a minimum, when issues are identified, they add time to the deal, or worse still, deals can fall apart altogether.
By taking a proactive approach, much time can be saved down the road, and your goal of selling your property will come to fruition. Talk to our team about questions you have while considering your “to do” list to list your property or when you are thinking about how to sell commercial real estate. We are happy to help wherever we can.
Additional Articles/Links of Possible Interest when you want to know how to sell commercial real estate:
- Difference between a boundary survey and an ALTA survey
- Definition of an ALTA Survey
- Title Insurance Fee Calculator
- How to Make a Good First Impression when Selling or Leasing Commercial Real Estate
To Buy Existing or to Build New…That is the Question:
The decision whether to buy an existing commercial or industrial property or to build from the ground-up is a dilemma many business owners face. There are many factors to consider in making this decision. As the team at APPRO and CERRON assists business owners find creative and unique property solutions, this question inevitably surfaces. As a result, our team has created a side by side comparison chart of considerations to use in the process of making this decision.
In this article, you will learn about the top 5 considerations when deciding whether to build new or to buy existing commercial or industrial real estate.
As your business continues to grow, you may have found yourself transitioning from a small lease space, to a larger lease space. Eventually, you may have outgrown that, too. Now, you have found that in the best interest of your company, you need to purchase real estate for your next move. The question is, do you build it from scratch, or do you buy existing? Both have their pros and cons.
Some common considerations include:
1. Time: The amount of time you have to make a move. It is never too early to start planning your next location. Depending on the size and type of property, the time you need to either build or buy, can make a significant impact to your available choices. If you don’t know how much time you need to build, we would suggest reviewing our Project Timeline (which shows both the timing for choosing a new location & the amount of time to design and build).
2. Location: The location you choose may have future ramifications you need to be aware of today. Considerations regarding zoning, access, restrictions, and incentives are items to consider today. Additionally, considering your ability to make modifications in the future may have impacts you hadn’t originally considered today, but will matter down the road. Will you be able to add on if you should continue to grow?
3. Key building components: Consider the existing structure – are you able to make use of the space as is? Does it have ample parking? If not, are you able to add more?
4. Future considerations: Will you be able to add more space in the future? What does the neighborhood look like now? What are the future plans? What is your 5-7 year vision?
5. Total costs: Are you considering not just your hard construction costs or costs to purchase? Are you also considering the soft costs? (You may download our free resource, “Total Construction Costs” to see a list of hard and soft cost considerations.)
To Buy Existing or to Build New:
As you can see, there are a lot of things to consider when purchasing or building commercial or industrial real estate properties. The team at APPRO and CERRON have created a complete Buy vs. Build Comparison Chart going into more detail, beyond this Top 5 Considerations list. Download the complete chart today to add more information to your property solutions toolbox!
Please contact our team for more questions, or leave us a message below.
Lease space in Lakeville MN & Dakota County MN: The options are abundant in multiple property types including office, office/warehouse, industrial, manufacturing and retail.
CERRON has many listings available now in and around Dakota County, Minnesota:
- Apple Valley
See a sampling of our many listings below.
Office Listings – Office Space For Lease:
In Simply click on the image to link to the full list of office spaces available in south metro, MN. CERRON Properties has entire suites available for lease or sale, and we also have many individual offices available for lease – some even available on a month to month basis.
Simply click on the image below to view all of our industrial listings available:
Simply click on the image below to view all of our retail spaces available:
In addition to lease spaces available, we also have many land listings for sale. Simply click on the image below to view all of our land for sale:
As you can see by perousing the various listings above, we have many properties available that might be the perfect property solution for you and your business. If you did not find what you are looking for in the links above, please contact our team to create a custom search for you, by clicking on the following link. We have new properties coming on the market all the time.
Our team would be honored to help you find your perfect property solution!
Top Ten Tips for Choosing a New Space for your Business:
Don’t commit to a new space before reading these tips for choosing your next commercial space!
As a business owner securing a new location for your business, you want to know that you are getting the best space for the best price, with no surprises. In this post, our team reviews the Top Ten List for Shopping for your next space.
In this article you will learn:
- How to create a shopping list for your next space;
- Tips for choosing your space; and,
- How to “seal the deal”
HOW TO SHOP:
According to a recent article in Entrepreneur magazine, “Criteria to Consider When Renting Commercial Space” by Joe Worth, your search can never begin too soon, as Worth suggests starting your search early, “the more time you have, the more leverage you’ll have during negotiations.”
According to Worth, your shopping list should include the following ten items for consideration, when choosing your next commercial space:
1. Rent: How is the chargeable square footage calculated? Make sure you are comparing apples to apples.
2. Lease Term: What is the length of the term? What are you willing to live with? Landlords will have their own preferences; you will need to consider what works well for you.
3. Rent Increases: How are they calculated? Are they automatic?
4. Extra Costs: What is included in the rent and what do you need to pay on your own? Depending on the type of lease, you may also be responsible for paying common area maintenance (CAM) charges, in addition to utilities, taxes, and insurance.
5. Prepaid Rents and/or Deposits: Landlords may require a deposit or similar first and last month’s rent before move-in date.
6. Cost of Improvements: These costs are often paid by the landlord, which will subsequently be rolled into the rent – typically over a longer term lease.
7. Conditions of the Build-Out: Find out who will be responsible for oversight of the work and who is required to approve it.
8. Maintenance and Repairs: Very often, the tenant is responsible for maintenance and repairs, except common areas – be sure to clarify who is responsible for what.
9. Right to Sub-Lease: Find out upfront, if you have the landlord’s approval to sub-lease the space down the road.
10. Exclusivity Rights: Especially if you are in retail, you will need to inquire about exclusivity, so competitors do not open a store in the same building or complex.
Once you have found your ideal space, try to narrow down to your top two or three. Then, begin to work with your broker to negotiate your top pick. Once a satisfactory deal has been negotiated, Worth suggests that you hire a real estate attorney to examine the lease agreement (be sure that this is a real estate attorney, vs. your general counsel). They will be able to review the agreement in consideration of your specific interests.
GO GET THAT SPACE!
Now you have some of the top tips to choose your next lease space! Our team has a variety of additional tools for you, as you search for lease spaces. Be sure to check out our Space Calculator, and view our current Lease Space Inventory, including Office Lease Space, and much, much more. Then, contact our team to start looking at lease spaces for your business!
SELLER FINANCING COMMERCIAL REAL ESTATE OPTIONS EXIST IN LAKEVILLE, MN:
Seller financing commercial real estate options do exist! CERRON Commercial Properties, a Lakeville-based commercial broker, recently listed an office property at Lakeville Town Offices in which the seller has offered seller financing on this gorgeous office condo property.
The listing is a unique office property in the city of Lakeville, Minnesota. Unique in that this property will appeal to a variety of users. The property is currently set up for use as a photography studio. Upon entrance, there is an open reception/entry with custom built-in cabinetry, sink, fridge and microwave. Just off of the entrance is a private office, which could also be used as a conference room and includes an amazing sound system designed to allow for different music to be played in each location throughout the office.
Additionally, the main floor office includes a built-in projector and projection screen. The remainder of the main floor includes a restroom, dressing room, and large open studio space. The studio space offers tall ceiling height, a second access point to the rear of the property, and a drive-in door could be re-opened (currently closed off), with additional parking spaces. This studio space could be built-out to offer additional private offices and a conference room, or a large shared work space.
The second floor offers a large shared work space with multiple custom built-in workstations and a large center work table. This space offers unique architecture and windows bestowing abundant natural light.
SELLER FINANCING OPTIONS DO EXIST
If you have been searching for seller financing options and want to learn more about current options contact our team today. Additionally, if you are a property owner looking to sell your property and want to offer “seller financing” as an option, you may also want to connect with our team to learn more about the process and how it may be a benefit to your property marketing efforts.
To learn more about this property, see the full property listing HERE.
Contact the team at CERRON with any questions you have on this seller financing commercial real estate offering, for other space options, or a space you already own.
Manufacturing Warehouse Space Available MN:
The team at CERRON has a variety of manufacturing warehouse spaces available in and around the south metro, Minnesota.
These industrial buildings range in size from 3,000 to 100,000 SF in Apple Valley, Bloomington, Burnsville, Lakeville, Rosemount, and Farmington.
Whether you are looking for a specific clear height, number of dock or drive-in doors, outdoor storage, or a location on or near rail service, our team can work with you to identify the ideal space to meet your needs.
Here are just a couple of examples of current manufacturing warehouse properties we have available:
21673 Cedar Avenue (click on the address to see full details including brochure)
This warehouse space for lease mn (or for sale) almost 100,000 SF space includes: 93,283 SF of warehouse / manufacturing, 4,486 SF office, (6) Docks (4-enclosed), (3) Drive-Ins, Heavy Power 4600A/480v, 18’ to 19’6” Clear Height, Purchase or Lease (2 tenants possible).
8640 Harriet Avenue South (click on the address to see full details including brochure)
This office warehouse lease space offers two space options: Option 1: 7,000 SF Warehouse; and, Option 2: 2,600 SF Office (build to suit). Office is located on the 2nd floor. Near 494 & I-35W, by Lyndale Ave. Office space includes lots of windows and is dividable. Warehouse space includes 3 drive-in doors, floor drains, and air make-up.
Spaces Available Now:
Our commercial and industrial property inventory changes weekly. Connect with our team to discuss your needs and we can set you up on a search to find the ideal property, or line up a showing for you.
We would love to hear from you…feel free to leave us a note below:
APPRO and CERRON is Getting a New Look
The APPRO and CERRON website located at both www.APPRODEVELOPMENT.com and www.CERRON.com is getting a new look! Over the past week we have transitioned from our original website to a newly designed platform, which will be faster and easier to navigate, with the goal of saving you time while you are searching for a property solution.
Our new site will still include all the property solutions tools we have had on our website in the past:
- Search Commercial Real Estate (CRE) Listings in MN and ND
- Search Current Commercial Construction Projects in MN and ND
- Search Completed Commercial Construction Projects in MN and ND
- Find Commercial Property Solutions and Tools (e.g. Space Calculators, Financing Tools and Checklists, Maintenance Checklist, and more!)
Over the next few days, we will continue to bring in all of our property listing and project records. We apologize for any inconvenience during this time and sincerely appreciate your patience. Our team is working quickly to provide more property solutions for you!
In the meantime, if you should have any questions, or are looking for a specific property, please do not hesitate to contact our team. You may email our team at: firstname.lastname@example.org or email@example.com, or feel free to call us at either (952) 469-2171 or (952) 469-9444.