You may know your property manager as the guy who sometimes swings by to see if you need anything, fixes what’s broken, and generally keeps the building in good shape. If your property manager is a good one, tenants will never see him or her because nothing is broken. Fire alarm tests will be done in the early morning and an HVAC filter change may be done on a Saturday afternoon. Because he often goes unnoticed (unless there’s an emergency), many building owners underestimate what the life of a property manager is actually like. Let’s look at a typical day and see:

5 am: Joe wakes up to his alarm and rolls out of bed. It’s fire alarm day and the alarms in his buildings need to be tested before the tenants come in for work.

5:30 am: Joe meets the inspector at his first building. It’s a medical office, and the working day often starts early. They need to get all the alarms inspected before the first patient comes in at 7 am.

6 am: The blaring alarms go off for a 30 minutes as Joe walks around the building checking all the blinking lights—a relaxing way to wake up.

6:30 am: Joe is driving to an HVAC service appointment at another building when he gets a call from the owner of a retail store he manages across town. The air conditioning condensation line backfilled overnight and there’s half an inch of water in the basement. Joe reassures the owner that he’ll be there as soon as he can.

6:35 am: Joe lets the HVAC contractor up onto the rooftop unit, explains how to lock the door, and then runs back down to his car and starts to drive across town.

7 am: Joe arrives at the small retail store and sees the tenant moving cardboard boxes out of the basement so they don’t get wet. He told the owner this would happen if it wasn’t fixed weeks ago. But the owner reasoned that it was almost Fall, they wouldn’t be using the AC much longer and it was an expensive fix.

7:05 am: Joe talks with the tenant about the situation and what to do next. He already has an HVAC contractor in mind who does a great job and often gives Joe a discount. 

7:10 am: Joe is already on the phone with the contractor as he heads into the basement to survey the situation and start the sump pump. 

7:30 am: Joe is working hard to get water out of the basement when the contractor shows up and takes over. Joe heads upstairs to talk to the client, give them an update on what’s happening, and then leaves the rest of the work to the contractor.

7:45 am: Joe finally has a moment to grab breakfast. He starts to drive back across town to where the HVAC contractor is working on servicing the rooftop unit when he gets another call. A security alarm is going off at a manufacturing facility. He knows the tenants don’t start work until 9 am and is concerned that someone is breaking in. He hangs up with the alarm company and calls the building owner on his way over. The owner is understandably worried and wants Joe there as soon as possible.

8 am: Joe pulls up to the building and doesn’t notice any signs of breaking and entering. The police pull into the parking lot just behind him and start to review the building. Joe lets them into the building to check the inside. The ‘burglar’ turns out to be a squirrel who managed to get in through an upstairs vent. Joe makes a note to look at the vent for damage.

8:45 am: Joe finally pulls back into the parking lot of the building that was receiving HVAC service on the roof. He inspects the work the contractor did and then locks the door behind him. 

9 am: Joe arrives back at the building with the broken AC condensation line. The contractor is just finishing up and recommends that Joe discuss water damage from the break with the building owner. 

9:30 am: Joe starts his daily drive across the county to check in with some of his buildings, owners, and tenants. He finds that checking in periodically to see if there’s any preventative maintenance that can be done leads to fewer emergencies later.

12 pm: Joe heads home to eat a quick lunch before starting on some accounting. It’s not his favorite, but he needs to estimate yearly expenses for an upcoming triple-net lease renewal. Accounting like this will take him at least an hour or two of intense focus.

2 pm: Joe is just putting the finishing touches on his accounting worksheet when the phone rings. It’s the tenant in a medical building. It’s a uniquely set up building with a therapist’s office right next to a dentist. The dental equipment can be occasionally noisy, and the therapist finds it hard to work with her patients over the noise of the equipment. Today’s complaint is related to a client who was undergoing a root canal. The not-so-relaxing noise made it very hard for the therapist to do her work.

2:30 pm: After a long conversation, Joe heads over to the dental office to see what can be done. Thanks to his basic training in construction and experience with engineering, he can rig up a better soundproofing system.

3:30 pm: After talking with the therapist and the dentist, Joe gets a call about some suspicious individuals loitering in the parking lot of a corporate campus he manages. 

3:50 pm: Joe pulls into the parking lot to find a group of five people drinking out of brown bags in a corner of the lot. They shout at a few employees walking into the building.

3:55 pm: He surveys the situation and decides to call the non-emergency line for the local police department, which he has saved on his phone. After watching the police come by and move the trespassers off the private property, Joe calls the building owner to talk about hiring a security guard.

4:15 pm: Joe heads to his son’s baseball game.

5:30 pm: Only an hour into the game, Joe’s phone rings. It’s a call from one of Joe’s new building owners. He keeps one eye on the game as he talks to the building owner about some new upgrades Joe wants to make to the building’s security system.

6:15 pm: Joe makes it back to the bleachers just in time to see his son slide into home. He hit a home run and Joe missed most of it. Disappointed, he promises himself he’ll see the next one.

The typical day of a property manager is long. Constant emergencies, maintenance needs, and juggling multiple bosses plagued Joe all day.

While property managers can take an occasional vacation, they often struggle with shutting off their phone. If an emergency happens, they need to respond—and fast. This fast-paced, never-ending lifestyle isn’t for everyone. An experienced property manager knows which contractors to call, has the team to take care of your building, and meet all of the building owner’s needs.

Don’t take on property management alone. AushCo has the property management team you need. After decades in the business, we have the right connections with local contractors for quality work at affordable prices.

Our team approach to property management means that you don’t have to worry about your building when you go on vacation. Our status as a management company with multiple buildings often provides us with discounts that we can pass on to our building owners.

Learn more about our property management services here.

When you look around your office and realize you need more room, it could be time to make the leap from renting to buying. This is particularly true if you’re renting almost an entire building for your company. The first time you consider buying commercial real estate can be a bit frightening. A house is a big investment—a building is a bigger one. How do you know if it’s the right time to buy? Can your business handle the transition?

Before we continue, take a deep breath. This article will answer most of your questions. Have more? Give me a call, and I can walk you through the process.

The Benefits of Owning Over Renting

There are a wide variety of benefits to buying an office space for your company instead of renting it. When you rent a space, rent goes up every year. When you own the building, you have a mortgage payment that stays at a flat rate. Your payment will stay the same each month, with no increase.

Assuming the value of your building doesn’t go down, the principal balance of every payment that you make on your building mortgage goes directly back to you as equity on the property. Your building is an investment. You can sell the building after your company outgrows it or rent it out for a (relatively) passive source of income.

Another benefit of owning a building is the flexibility and independence that comes with it. You no longer need a landlord’s permission to make changes. When it’s your building, you can make the space entirely your own. 

When Is a Good Time to Make the Leap?

Knowing when it’s time for your company to buy a building can be difficult. Each company is unique and needs to make the decision based on their own individual values. However, there are some indicators that can help tell a company when it’s time to buy.

Some companies have specific space requirements that can make it difficult to find the perfect property. For example, if you’re looking for a landscaper or contractor yard, you may have to wait quite some time for a space to become available. The next time a space is for sale, it’s a good idea to jump on the opportunity and buy. Otherwise, you could find yourself waiting another five or six years for the next opportunity.

Another indicator that it’s a good time for your company to buy a building is the size of your staff. If you find yourself needing to rent out an entire building to house your employees, then that’s a pretty clear sign that investing in commercial real estate would be a good idea. A five-person company probably doesn’t need to buy a building. But a 50–100-person company probably should.

The bigger the building you need, the easier they are to buy. Small office spaces are hard to come by. Typically, if you’re looking for a 3,000 to 6,000-square-foot building, you’re looking at townhouses or office condos, not an entire office park. Before trying to buy a building, consider the size you need. If it’s on the smaller end, you may get a nicer space by renting part of an existing office park.

Other indicators include a generally financially healthy business. You need to have more income than debt, a healthy balance sheet, and an appropriate amount of liabilities compared to your assets.

What to Watch Out for in the Buying Process

The buying process isn’t simple. There are plenty of pitfalls to avoid. Before buying the property, make sure you have a very thorough inspection done. Get a roofer on the roof. Have an HVAC professional look at all of the ductwork and heating and cooling systems. Make a list of all of the major building systems and have each one inspected thoroughly by an expert.

Make sure you fully understand your loan. A commercial real estate loan is different from your typical residential loan. The bank that took care of your home loan isn’t necessarily the right bank to work with for your commercial loan. Before choosing a bank, shop around to find the best bank for your business.

One common mistake is failing to check zoning laws. A building might be the perfect setup for your manufacturing warehouse. But before you get too excited, check local zoning laws. The last thing you want to do is buy a building, fit it out for your company, and then discover your business isn’t allowed to run in that area.

Why You Need a CRE Agent

While you aren’t required to work with a CRE broker throughout the process, it’s highly recommended. CRE brokers have access to information available exclusively to agents. There are very few sites that list commercial real estate for free.

When you work with a CRE broker, you get to work with someone who has expertise, knows the market, and knows what a fair price is. Buying a commercial building isn’t an easily acquired or well-known skill. Attempting to buy a commercial building without professional help is similar to trying to build your own home without ever having used a hammer.

At AushCo, we live and breathe Frederick and Hagerstown commercial real estate. We have a deep understanding of the CRE market based on decades of experience in the area. Buying commercial real estate doesn’t have to be painful, and when you work with AushCo, it won’t be. If you’re looking into making the leap from business owner to building owner, get in touch with us today.

We’re happy to help you find the best building for your business.

When you rent commercial property for the first time, it’s good to know a few tips that can guide you through the lease negotiation process. Unlike renting an apartment or house, more negotiation and haggling often goes into renting a commercial building. To understand the process, it helps to work with a commercial real estate broker who has years of experience to get you the best deal.

If you’re doing some research before you head into the negotiating room, here are ten need-to-know tips to rent commercial property.

1. Know Your Must-Haves

Every buyer has a list of things they would like, things they need, and things they absolutely don’t want. It’s important to have an extensive list of your priorities before negotiating. If you need more parking, then now’s the time to ask, not after you’ve signed the lease. Having a clear picture of your must-have items will help you negotiate a great deal. Without a clear understanding of your needs, you could find yourself swayed during negotiations and leave without key items in the contract.

2. Decide on Your Lease Length

How long will you be in this space? There are some perks to negotiating a longer lease. You can often get cheaper rent and you’ll be able to plan out the future of your business based on a solid location. However, there are some downsides as well. What happens if your business fails? Or your team grows, and you need a bigger space?

Take a close look at your business’s performance and how fast your team is growing before you sign a long lease. Remember, when you rent commercial property, your lease can range anywhere from three to five years.

3. Triple-Check the Contract

If you aren’t working with a professional real estate broker, you could be trapped into unfavorable terms, purely because you didn’t understand the language in the contract. If you’ve looked over the contract once, you need to look over it again. And again. Research anything you don’t understand and discuss the contract with your broker if there’s anything you don’t understand.

4. Negotiate the Perks

It’s difficult to negotiate key items like the base rent, lease term, or utilities. You may find it easier to negotiate on details like cleaning, who’s responsible for building maintenance, or Wi-Fi. If you’re able to negotiate free employee parking or more spaces for clients, you’ll save money in the long run. Don’t forget how expensive it can be  if a window breaks or the HVAC system fails. Negotiating perks like these beforehand can save a lot of money long term.

5. Understand Fair Market Rates

Understanding the CRE market in your area is crucial to rent commercial property. Could you tell if the rent your landlord is asking is way higher than what’s fair for the area? Understanding how the market in your area is trending takes time and expertise. It’s more than just researching what similar buildings are going for—it’s knowing when to take the leap and when to wait. You’ll be kicking yourself if you sign a contract only to have rent prices drop a few months later.

6. Become an Expert on Types of Commercial Leases

There’s more than just one type of commercial lease. Understanding the different types will help you get a satisfactory contract. For example, a single net lease means that the tenant only pays for the utilities and property tax. The landlord pays for maintenance, repairs, and insurance. In a double net lease, the tenant is responsible for utilities, property taxes, and insurance premiums, while the landlord pays for maintenance and repairs.

There are many different types of leasing contracts to rent commercial property. Understanding the difference between them means paying just utilities and property tax or paying for structural repairs.

7. Check the Cure Period

The cure period is the grace period you are given for breaching a contract. If the original contract states that your cure period is only a day, you could be subject to legal action for being only a day late on rent. Cure periods save you from facing large fines for small mistakes such as a bounced check or forgotten date. Don’t sign any contract to rent commercial property until a cure period is written into it.

8. Protect Yourself from Competitors

Let’s say you run a clothing store. You’re looking for space to rent. After you’ve found the perfect space, moved in, and set up shop, you’re horrified to hear that another retailer selling clothes to the same target demographic is moving in next door. Now, you’re losing customers to the new store.

It’s important to include a clause stating that the landlord won’t rent out space to one of your competitors. You don’t want to find yourself unable to pay your rent because a copycat of your business moved in next door.

9. Be Able to Walk Away

The first building you see, even the first building you start negotiations on, may not be the right building for your business. Instead of committing to one building immediately, be sure that if negotiations don’t work out, you can walk away. Being able to walk away gives you power over the situation and allows you to handle negotiations with a cool head.

10. Work with a Real Estate Broker

If this list has shown you anything, it should be that working with a professional real estate broker makes the process of renting commercial property that much easier. When you work with a real estate broker, you’re working with a professional who has the experience to guide you through the process. They’ll be able to help you get the best deal and are familiar with the negotiation process.

With the right partner, finding a commercial property to lease will be less stressful and time-consuming. And, most importantly, you can have full confidence that you’re getting the best deal possible so that your business can thrive in your new space.

If you’re ready to rent the commercial property of your dreams, get in touch with AushCo today.

In commercial real estate leasing today, the first tenant you find to fill a vacancy in a property may not be the best quality tenant for the investment over the long term.

Attracting quality tenants can be more difficult than some think, as you must consider a mix of tenants that will work well together. Ultimately, you need to consider first and foremost the future of the property, the improvements within the asset, and the investment targets of the client.  You can then choose the best tenant by type and market the property accordingly.

Making sure your property attracts as many high-quality tenants as possible should be done right from the beginning. The marketing strategy behind the leasing requirement will allow you to drill down into the factors of attraction that apply to the vacancy.  You want to attract the best tenants for the location.

Looking Over the Information You Need

You’ll need some information to assess the property, the client, and the local area. The depth and the strength of your research will help you match your services to the requirements of the client and the property.

It’s important to understand the client first. A few things to keep in mind include:

• How long do they wish to hold the asset?
• What are the requirements of cash flow from the lease?
• Are there other tenants within the property to support the rental return?
• In any medium to large property, you will need to review the lease expiry dates, rental structures, and occupancy pressures before you lease any vacancy to a new tenant.
• Are there factors of renovation that need to be incorporated into the tenant mix and the lease structure?
• Are there factors of risk that need to be incorporated into the property performance plan and the overall leasing strategy?

In answering all of these questions, you will have a reasonable idea of the best tenant by industry. Understand how the tenant will fit into the mix to strengthen the overall property profile and income return.

Add Square Footage to the Property

Increasing the square footage of the property is one of the most common ways of upping the ROI of properties. As long as the demand is there and construction costs are reasonable, this can be an easy way to quickly increase profits.

Keep in mind that while physically adding square footage is one way of adding more space, increasing the amount of rentable square footage can not only be more lucrative, since the added space makes for a higher load factor, but can allow you to raise rents when the extra space goes towards shared amenities.

This can be done by recalculating the rentable square footage according to the Building Owners and Managers Association’s method for recalculating square footage. Even though the BOMA standards have been around a long time, there are still buildings whose footage either wasn’t recalculated, or was recalculated but never implemented.

Add Shared Amenities

Amenities such as private lounges, complimentary WiFi, conference facilities booked through an online system, and trendy cafes, are becoming the quickest way to attract high-quality tenants.

Although the idea of creative office spaces was first seen among the technology industry, the idea of creating a work space where employees could work and relax together in spaces specifically designed for these functions has now become a mainstay of the successful modern office.

These amenities are more than just work spaces: they are spaces crafted to provide experiences that allow optimal work to take place.

Which amenities to add depends on several factors, but statistics show that while renovations for added amenities can add up, the value gained results in improved tenant retention, higher rents, and increased equity.

While some investors are dedicating entire floors to shared amenities, it might be best to start off with something a little smaller like a room or a suite, so that it adds value without taking up a bulk of your space.

Don’t Forget the Exterior

First impressions matter, and an exterior with low-quality finishes and halfhearted landscaping can turn off even the most easygoing tenants.

Fortunately, it’s unnecessary to renovate the entire exterior in order to achieve a memorable building; the following methods are low cost, easy to implement, and can be changed from time to time to update the building’s look.

Replace doors and windows

Replacing windows and doors that are either outdated or poorly constructed is one of the most dramatic ways of improving an office building’s appearance. Incidentally, it will also help you lower the energy costs of running the HVAC system.

Invest in landscaping

Many office buildings start out with professional landscaping, yet for some reason, end up with a hodgepodge of plantings that detract from the entrance. Professional landscaping is one of the best ways to get the most bang from your buck, and can be implemented immediately and at a reasonable price.

Update the signage

Office signs serve an important function. Signage outside the building makes it easy for staff, clients, and prospects to easily find their way into the building. Consider replacing both exterior and interior signs in order to provide a unified look to the entire property.

Increase parking and security

This includes repainting parking lines, repairing cracks in the pavement, adding cameras, an alarm system, mirrors, and other security features that both help tenants feel safer and decrease your insurance premiums.

Lease Priorities

A good tenant for a property will usually bring the following factors to the asset:

Stability – Every tenant should be assessed for stability before you commit to lease negotiations. You will need to review their business history, other locations of occupancy, and talk to the key people.

Income – Look at the levels of rental that apply in the local area. Will you be leasing the property on a gross or a net rental basis? What are the market rentals that apply respectively? How can you improve the income over time through rent review structures and strategies? How long should the lease be? All of these questions will impact the income for the asset. Answer the questions before you negotiate with the tenant.

Profile – Some tenants will bring with them a business profile that is attractive to the property. A business brand or a business profile can bring a marketing advantage to the property. Some franchise brands also achieve the same enhancement.

Taking these three elements into account, you can give the landlord some solid reasons to negotiate effectively and directly with the chosen tenant. Most landlords will cooperate when it comes to attracting a new tenant in a stable and strong lease arrangement.

Remember, these are just some of the ways you can attract the right tenants and increase your property’s value. You don’t have to implement all of them at once, and if you’re on a tight budget, asking your prospective tenants which improvements they’d appreciate most will give you a good idea which improvements are the most essential.

Using a helping hand

At AushCo, we create value for our clients by providing you with all the information you need so you can make the best decisions to effectively execute your plans.

As a premier commercial real estate company, we are here to provide the level of service we would want to receive ourselves. We put ourselves in the shoes of the investment property owner, tenant, or buyer, and make recommendations that provide the best financial returns and experience.

Contact us for more information so we can help you through any issues or questions you might have regarding commercial real estate.