*GEM* Global Emerging Markets by: Shannon Murphy BIZ: Tenant Representation Typical leasing time frame

*GEM* Global Emerging Markets by: Shannon Murphy BIZ: Tenant Representation Typical leasing time frame: OVERVIEW OF TENANT REPRESENTATION PROCESS If you are planning to lease  retail, office or industrial space, it will typically require 1 ...

Tenant Representation Typical leasing time frame

OVERVIEW OF TENANT REPRESENTATION PROCESS

If you are planning to lease  retail, office or industrial space, it will typically require 1 - 3 months from the start of the process through the execution of the Lease by the Landlord and Tenant.  From the date of the execution of the Lease, it will typically require an additional 1 - 3 months to complete the tenant improvements in the space and open the premises for business. Consequently, the entire process from the start of the leasing process to the opening of the premises for business will be a 3- 6 month period. A typical Leasing Timeline follows.  

 MONTH 1         Determine space requirements and preferred geographic location
                         Analyze available potential properties
                        Tour available properties that meet your requirements
                        Submit Letter of Intent on selected property to Landlord

MONTH 2         Negotiate Letter of Intent to execution by Landlord and Tenant
                        Begin the negotiation of the Lease document

MONTH 3         Negotiate Lease document to execution by Landlord and Tenant

MONTH 4         Commence space planning, architectural & preparation of 
                        Construction Documents  ( if necessary )
                        Begin Construction Contract bidding process
                        Building/Construction permit issued by appropriate governmental authorities

MONTH 5         Commence Tenant Improvement construction 

MONTH 6         Complete Tenant Improvements construction
                        Certificate of Occupancy issued by the appropriate governmental authorities
                        Premises turned over to Tenant
                        Premises opens for business

1) The Leasing Timeline is an overview of the typical steps in a lease transaction and the normal time periods required to complete the steps.  Each lease transaction is unique and the specifics of each deal will determine both the required steps and the time period required from the start of the leasing process to the opening of the premises for business.

2) As an example, the entire process could occur as quickly as 90 days if a client selects a space that requires no Tenant Improvements so that there is no need for space planning, architectural, construction document preparation or construction. This also assumes that from the start of the leasing process through the execution of the Lease by Landlord and Tenant the transaction proceeded fairly quickly and efficiently.

3) On the other hand, if a client leases a space that will be utilized as a restaurant/bar or an office space that has to be demolished and rebuilt to accommodate the client, it may require at least 6 months to get the business open. This is due to the necessary additional time spent in planning, architectural, construction document preparation, construction contract bidding, permitting and the construction of the tenant improvements.

4) If you are contemplating leasing space, please contact us and we will provide you a no cost, no obligation realistic timeline of the leasing process based upon the specifics of your proposed use.


cre@shannonmurphy.biz
www.shannonmurphy.biz
480.290.0249 call/text

Current and Future Retail sector Clients

Ten things every retailer should know before renewing or entering into a new lease.

10. Location – You must know that the neighborhood, area, or submarket that you have chosen is the best location for your specific business needs and customer preferences.  The location of your operation can make or break our company, especially in this economy.  This has as much to do with attracting customers (demographics) as it does attracting product accounts as you may be precluded from carrying certain brands if you are too close to a specific competitor.  It is crucial to take traffic and parking into account, as well as the ability for skateboarders to skate to your shop or park.

9. Length of Lease – You must know the length of lease (minimum and maximum) for a specific location that you
are comfortable committing yourself to.  The length of the lease that you should commit to depends on your growth strategy and your ability to justify the cost and downtime involved with a move.  Keep in mind that shorter
leases can provide more flexibility if the needs of your shop change.  A long-term lease ensures that you will have an affordable retail space for a predictable period of time.  Landlords are sometimes willing to make more
concessions on longer-term leases.  It is also important to know that it is possible to negotiate specific options to renew under similar terms and concessions while negotiating a new or renewal transaction depending on the amount of leverage created.  The term of the lease has as much to do with the negotiations as the rental rate.

8. Square Footage – You must know the minimum square footage that can accommodate your needs based on the
length of lease that you have determined.  In many markets, larger spaces lease for lower amounts on a per-square-foot basis, but if you are not going to be utilizing the additional space over the term of your lease, it is not worth
paying more per month.  It may be helpful to break your square footage down by revenue-generating areas allowing for additional inventory storage, room for growth, and possibly a small video-viewing area in order to better
determine your space needs.  That extra 800 square feet for a mini-ramp may be well worth the cost as it can attract additional customers who may not otherwise drive across town to visit your shop, but it is critical to determine
if this is quantifiable and worth the additional monthly cost.

7. Budget – You must know your realistic monthly leasing budget.  Not only do you need to budget for your monthly rental payment and moving costs, but depending on rent structure you may need to budget for property taxes, property insurance, liability insurance, HVAC maintenance, common area maintenance (CAM) expenses, janitorial, electrical service, and telephone/data service.  In some cases, you will be responsible for your pro rata share of the overage in some of these costs after the first year.  This can be significant so make sure that you have determined a realistic budget taking into account annual increases for all of the aforementioned items given your projected revenues and your other expenses prior to entering into negotiations.  If you don’t have a budget, you are absolutely not ready to take the next step.  If the space fits all of your other needs like a glove but does not fit the realistic budget that you have determined, do not sign the lease or lease amendment.

6. Timing – You must know when to begin to take steps to identify and negotiate on a new retail space.  Most tenants wait far too long to address the issues related to their expiring leases, simply ignoring the issue until the landlord initiates a conversation.  Conducting the due diligence necessary to effectively create leverage typically takes at least three months.  The lease negotiation and relocation process ranges from three to six months at a minimum.  The other consideration to keep in mind is the two to four months needed for space planning, permitting and construction of tenant improvements.  The entire process should be finalized no later than three months prior to lease expiration, which means the tenant should start addressing lease negotiations twelve months before the expiration date.  Even if you intend on staying in your existing space,  you need the same lead time to convince your landlord that you will move if they do not accommodate your  needs.

5. Improvements – You must know generally how you will lay out your store prior to reviewing alternatives.  Depending on the lead time that you give yourself and the tenant improvement dollars that a landlord will be willing to provide, oou may need to occupy a space in its “as is” condition.  It is critical to know your desired layout prior to touring spaces so that you do not waste any time viewing alternatives that just won’t fit.  For example, if you envision a massive bowl in the back of your shop, a) you cannot expect the landlord to pay for it, and b) if there is a restroom in the area where you envision your bowl, the restroom stays and the bowl gets much smaller or goes away.  In most cases, landlords will not pay for tenant-specific improvements such as shelving, dressing rooms or counters so it is important to budget for those items as well.

4. Holdover Clause – You must know about this clause and understand how it can affect you.  Leases are
generally written with complicated legalese designed to give the landlord an easy out on every commitment.  One area that is often overlooked is Holdover.  A Holdover clause, which states the amount of rent that you will be obligated to pay for every month that you stay past the lease expiration, is included in most leases.  This amount can range from 120% to 300% of your monthly payment.  This can be negotiated when entering into a new agreement and sometimes when renewing, but it is crucial to be aware of as it relates to the timing mentioned above.  Other troubling clauses should be identified and understood prior to signing the document.

3. Lease Comparables – You must know where to find reliable market information that can be used to create
leverage.  By obtaining and understanding where your prospective landlord and other landlords in the area struck their most recent deals (including free rent, annual increases, tenant improvement dollars, rental rate, and other concessions), you will have much more leverage when negotiating a renewal or new deal.  This type of information can be obtained by spending weeks interviewing your neighbors and other tenants in the area, but it is much more easily obtained, reliable and useable through a professional commercial real estate advisor  CONTACT Shannon Murphy for further information . 

 2. Alternatives – You must know everything about alternative comparable space in the surrounding area.
Knowledge of the quality, quantity, and cost of relocation opportunities provide leverage for you when negotiating with your current landlord, as does knowing the length of time comparable commercial spaces have remained
vacant.  This type of information can be obtained by driving around and making hundreds of sign calls or pulling information off of one of the fragmented multiple listing services available to the public, but it is much more easily obtained, reliable, and useable through a professional commercial real estate advisor.

1. The Negotiation – You must know how to set the tone for the negotiation.  Negotiating a new lease or
a lease renewal can be a daunting task. Landlords will do everything they can to achieve the highest rent possible while giving up or spending as little as possible.  That is, of course, how they make their living, and you should not blame or disrespect them for that.  You should, however, fight for your best interest.  But keep in mind that establishing a healthy, long-term relationship with your landlord is crucial.  A high-quality commercial real estate advisor can negotiate fiercely on your behalf while keeping you in good graces with your landlord.  Landlords know that a commercial real estate advisor will educate you and ultimately cost them revenue. To avoid this, some landlords approach their tenants early and propose two sets of lease terms: the first proposes a lower rent if the tenant is not represented by a broker; the second imposes a higher rent for broker-negotiated deals.  The landlord blames the extra cost of the latter on commission fees, but the truth is that a high-quality commercial real estate advisor can negotiate much better terms than either scenario offered by the landlord at little or no cost to you.

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Shannon Murphy 

602.726.1818

480.290.0249

cre@shannonmurphy.biz

www.shannonmurphy.biz

Getting an SBA loan

It’s not an opinion that small businesses are a vital part of the American economy it’s a powerfully backed fact. Small businesses employ half the workforce and create 60 percent of net new American jobs.

The Small Business Administration (SBA) has programs and new incentives that can help small businesses in the fight for capital.

The SBA not only guarantees loans to small businesses, but also works to get small businesses capital in other ways, too. In February, the SBA announced it had launched a new online marketplace that will match potential SBA loan candidates with bank lenders in all 50 states.

The service, Leveraging Information and Networks to Access Capital (LINC), joins alternative lenders such as Kabbage, On Deck Capital and Biz2Credit, which provide financing to small business owners through digital marketplaces that match lenders and borrowers.

New incentive

Also this year, the SBA began offering an incentive to help get companies licensed as “early-stage small business investment companies,” in an effort to increase capital for entrepreneurs and startups. This new incentive would allow licensed companies who put at least 50 percent of their investment dollars in early-stage small businesses to qualify for federally guaranteed loans. The goal is to support President Obama’s Start-Up American Initiative and to encourage private-sector investments in startups and small businesses.

For businesses that won’t benefit from the new incentive — since it applies to those that have never achieved positive cash flow from operations in any fiscal year — an SBA-guaranteed loan is still an option. The SBA doesn't actually make direct loans to businesses; it provides a guarantee to banks and lenders for the money they lend to small business owners, which alleviates the risk of lending to business owners who don’t qualify for traditional loans.

There are a variety of different loans to choose from, but the 7(a) General Small Business loan is the most common. Here are four steps for getting an SBA-guaranteed loan:

1). Prepare

Before you apply for a loan, there are several things you may want to get in order. During the small-business loan application process, you may be asked for some or all of the following:

• Personal background information including previous addresses, other names used, criminal record and educational background, among other things
• Resume
• Business plan
• Your personal credit report
• Your  D&B business credit report
• Income tax returns (most loans will require personal and business returns for the previous three years)
• Financial statements
• Bank statements (often lenders will require personal and business statements for the past year)
• Collateral document describing the cost/value of personal or business property that will be used to secure a loan
• Legal documents, including business licenses and registrations required for you to conduct business, articles of incorporation, copies of contracts you have with any third parties, franchise agreements and commercial leases
• You’ll also want to be prepared for the questions your lender might ask. You should know:

• Why you’re applying for the loan
• How the proceeds will be used
• What needs to be purchased and who your suppliers are
• What debts you have and who your creditors are
• Who is on your management team

You can use this checklist for reference.

2). Find a lender

Because the SBA doesn’t lend directly to businesses, you’ll need to find a lender. Once you’ve found the right one, contact one of the lender relations specialists at the SBA to get started.

3). Apply

Once you’re prepared and have found a lender, you’re ready to actually apply for the loan.

You’ll also need to fill out a statement of personal history and a personal financial statement. Make sure you have everything is in order so your lender can submit your application to the SBA, and then you’re finished.

Finding better ways to get small businesses access to capital is imperative for the stabilization and growth of our economy. With SBA loans, business owners can get much-needed access to capital so they can grow their companies and create more jobs.

Have questions and or Need further information please contact:

Shannon Murphy call/text 480.290.0249

www.shannonmurphy.biz

CRE & Boilerplates

1)Boilerplate LANGUAGE 

What do you use for your proposals? My guess is most of you reading this do use a boilerplate in some capacity. Boilerplate language is efficient and even important. It communicates with consistency what we want to say. It also assures that the language is vetted for accuracy, messages are clear and liabilities are avoided.

2)The CHALLENGE 

Is when boilerplate language crosses over to fill-in-the-blank mode. This is an easy response when there is a deadline to meet. Too much to do with too little time opens the door to expediency. "Just cut and paste from the proposal we did last week. It will fit and save us a lot of time."  The challenge is when the uniqueness of a client and the relationship with that client gets lost in the process.

3)Boilerplate in ACTION

Proposals that are presented are typical over 80 percent boilerplate. The boilerplate  addresses areas of the  clients needs, but the overall proposal does not  speak to the specifics of the client's situation.

4)Finding a BETTER way

 The point here is to raise the importance of each clients situation. Begin by listening well. Assure clients that they are heard, and be specific with responses that address their situations. Point-by-point, demonstrate to the client how goals are met, risk reduced and anxiety eased.

5)Gain EFFICIENCIES    

Your efficiencies can equal greater profit, and no one should begrudge that profit,  which is  earned  through years of experience and expertise. However, don't let efficiencies dominate client-facing engagements and responses. Each client is unique, and deserves to be listened to and engaged with in a unique way. Feel free to use a  boilerplate. Just make sure that you're addressing your client's needs in a very specific manner .

Shared by: SHANNON MURPHY  

Would you like additional information ? Have comments?

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CRE DUE Diligence

CRE is currently seeing an unprecedented trend in how fast due diligence needs to be performed. This is especially true in core gateway markets to some extent. There is an increased appetite by investors to deploy capital into real estate that is putting pressure on them to do deals more quickly. This increasing need for speed creates a greater chance of investors being burned on real estate deals, as when times are good in the industry investors are sometimes blind to past failings.

There is no doubt investors have a decreasingly short period to make investments, as right now these gateway markets are hot and more and more equity is available for deployment, causing prices to rise as demand outstrips supply. The fear is that in order to meet expected returns, investors will be required to either move up the risk spectrum or to diverge from their usual investment strategy while on the hunt for attractive assets. Some investors may also face additional risk by moving away from their core property strengths and taking on assets they are less experienced in managing.

In past years it was not uncommon for an investor to have anywhere between 30 to 45 days to complete their due diligence.  However, we are seeing time lines as short as five to seven days for a buyer to either complete their due diligence or waive contingencies. We have heard of several cases where our client released hundreds of thousands of dollars in order for the seller to allow them the opportunity to sign the purchase and sale agreement. The drive for these expedited time lines and deal constraints is simply the competitive nature of the market for these core cities and the class-B+ to class-A quality assets within these markets. 

We are seeing this trend in assets of varying sizes. As the number of potential buyers increases, so does the market demand for fast "go hard" decisions. While the trend is most evident on larger assets in the $100-million-plus range, it is becoming increasingly common on $10 million to $100 million properties. For these properties, it is extremely difficult to get exclusive due diligence periods without leaving some "walk away" money on the table.

There is an obvious, inherent risk with these deal structures, but aligned with a qualified and experienced consulting team a client can often offset this risk.

We are often asked, “How quickly can you prepare a report for my acquisition?” This approach is flawed from the outset. Only after a clients’ risk profile is assessed can an appropriate due diligence scope of work and schedule be established, provided a report is actually even required.

The purchaser’s familiarity with an asset type and market help establish the baseline for review. Flexibility in reporting and communicating findings is essential oftentimes enhanced post-site visit debriefings, detailed conference calls with the team, and preparation of complete summaries with opinions of probable costs may be all that is needed to give meaningful guidance to clients.

Qualified consultants respond to this need for increased speed in due diligence with condensed deliverable, prepared by skilled architects and engineers. The focus is a "get to the point," numbers-driven analysis tailored to a client’s needs, which provides them with the critical data they need to make the best business decision possible.

Creative report delivery strategies must be explored, but nothing can replace the trained eye of a highly experienced due diligence advisor supported by a network of seasoned experts. Having a well-rounded generalist who is a registered architect or professional engineer lead the process is invaluable, especially when specialists are added to the team to review specific building systems and components. And when there is time pressure surrounding the review of real estate, this makes all of the difference.

Shared by: SHANNON MURPHY 

Would you like additional information? Call-Text   480.290.0249 or email

CMBS, Shadow Lending: Where the CRE Money Is - Daily News Article - GlobeSt.com

CMBS, Shadow Lending: Where the CRE Money Is - Daily News Article - GlobeSt.com

Push your EGO aside so your BUSINESS can succeed!

Once upon a time, forceful personalities like Rockefeller, Ford and Carnegie drove business empires — and their egos drove them.

But the business climate has changed drastically in recent years. 

With rare exceptions, single companies can no longer monopolize a market. Competition has also increased, especially as advancing technology has made start-ups common. Nowadays, just a few talented individuals can overturn an entire industry — just as  Steve Wozniak, Steve Jobs and Bill Gates did it for personal computing.

 While there's plenty of room for small, niche providers, today the largest, most successful businesses are best served by diversity — meaning multiple divisions, departments and teams.

Cooperation and co-dependence have replaced competition and ego as desirable characteristics. Whole organizations have fallen apart because of ego-driven issues. A good example is the old Hostess Brands, where management and labor were always at each other’s throats. It wasn't just ego that killed Hostess, but it certainly played a role on both sides.

#1 GOODBYE INNOVATION

When innovation goes out the window because we can't accept challenges to our egos, our companies take a hit. In an episode of the TV series “ Mad Men,”advertising exec Don Draper refuses to accept that a new go-getter's idea for a campaign works better than his own...so he deliberately "loses" the kid's plans in a cab when meeting with the client. He knows intellectually that his rival's campaign is superior, but his ego sabotages the deal.  Ego can also drive you to shift blame, avoid embarrassment or shame or otherwise warp reality to keep you from fully understanding and accepting it. Before you take any of these actions, stop and think about what you're doing — and how it can hurt you and your team if you keep it up.

#2 Forget proving yourself

Often, ego arises from a need to prove yourself to someone — you, your parents, your spouse or your colleagues. Maybe you want to be the first on your block with a new  BMW, and that's what drives you. Fine, as long as your ego doesn't get in the way of what really matters: Solving problems, being productive and helping your customers. In other words, doing your job. Your customers (or downstream users) just want whatever you've promised them. Working isn't about providing how great you are; it's about getting the job done as effectively and productively as possible. That's how you prove yourself.   

#3 Action step 

The days when you could succeed on your own are history. Business is a communal effort, as are most great things in society.

Rather than let your ego get in the way of organizational success, find a way to push it aside when dealing with others. Listen to what they say, and give it due consideration.

If you still think your idea is best, so be it — but don't let your ego blind you to another's brilliance. Team efforts need team players, not loose cannons. Toughness and personal drive may be necessary for success, but so are cooperation and compromise.  

Shared by : Shannon Murphy 

Phoenix Retail Market on the Slow Climb to Recovery

Phoenix Retail Market on the Slow Climb to Recovery

Chinese companies look to invest in American real estate | Marketplace.org

Chinese companies look to invest in American real estate | Marketplace.org

NEW LAW TO INCREASE EFFICIENCY AND LOWER COST FOR ARIZONA BUSINESSES

Many prudent real estate professionals form a business entity such as an LLC or PLLC for their business.  On January 1, 2015, Arizona introduced a more business-friendly legal framework for entity restructuring transactions. Thanks to this new law, these transactions will be more efficient and available at a lower cost.

Background: What is an Entity Restructuring Transaction?

It’s not uncommon for a business to reach a point in its life where it needs to undergo an “entity restructuring transaction” – a transaction to change its form or location. There are five reasons why a business entity transaction may be required.  For example, you might have started your family-owned business as a partnership, and now the business has attracted new members or investors.  Or perhaps your real estate investment company needs to divide into one or more new limited liability companies to diversify or to help manage risk. 

Here is a brief summary of the five different entity restructuring transactions: (1) a merger – this occurs when two entities combine into one surviving entity; (2) a conversion – this occurs when a single entity changes form — for example, when a limited liability company converts into a corporation; (3) an interest exchange – this occurs when owners trade their ownership in one company for ownership in another company; (4) a domestication – this occurs when an entity formed in one state changes its state of incorporation to another state; and (5) a division – this occurs when one entity divides into two or more entities.

The Problem: Obsolete Law Governing Intricate, Multi-Step Transactions

Historically, entity-restructuring transactions have required multiple steps to accomplish, ratcheting up risk and expense. Your business may have even needed to dissolve to change its form or location. In that case, you would have needed to wind down the business and satisfy creditors and interest holders, potentially incurring adverse tax consequences. Those consequences erode profitability. And those consequences are counterproductive to a company that simply wants to continue in another form or location.

Compounding the problem, Arizona has not had a comprehensive statutory framework for these transactions. Arizona’s entity restructuring laws were hard to find, scattered throughout Titles 10 and 29 among the twenty-two types of Arizona business entities. And Arizona’s entity restructuring laws were incomplete, leaving out domestications and divisions. And those laws were procedurally inconsistent, imposing different requirements for the same transaction on different entity forms.

The Solution: The Arizona Entity Restructuring Act and its One-Step Transactions

The Arizona Bar and Arizona lawmakers recognized the above problems and have been working over the last four years to implement a solution: the Arizona Entity Restructuring Act (“AERA”), effective January 1, 2015.

In sum, the AERA universally applies to all kinds of business entities. And the law allows your company to change form or location, without dissolving and winding down. Cross-entity transactions are available. And the statute fits with Arizona’s existing laws for business entities, meaning that Arizona’s current corporate and partnership statutes will remain intact. Moreover, these new procedures will not extinguish creditors’ interests as a debtor-entity changes form. Therefore, the AERA allows for seamless, non-disruptive transitions between the old and new companies. Entity restructuring transactions will be more efficient and available at a lower cost.

Here is the simple process for changing an entity’s structure under the AERA.

First, each kind of transaction requires a written plan, one approved by the company’s interest holders. The plan will describe the details and effect of the transaction. You approve that plan according to your company’s organizational documents, such as its bylaws or operating agreement, or AERA’s default rules. Second, once the plan is approved, a statement concerning the transaction must be filed with the appropriate filing authority, which is the Arizona Corporation Commission for corporations, business trusts, and limited liability companies, and the Arizona Secretary of State for limited partnerships and limited liability partnerships. That statement notifies the public of the transaction and identifies the surviving business entity. 

To round out this discussion, the AERA does not apply to government agencies, trusts, or estates — and does not displace relevant regulatory statutes, dissenters’ rights, or appraisal rights.

Application

Prudent investors and business owners should wisely chose the correct business entity structure to limit liability and to aggregate capital and assets, such as real estate. Thanks to the AERA, businesses will be better equipped to stay nimble and restructure as needed.  The AERA is straightforward and comprehensive. Overall, it encourages new businesses to incorporate or organize in Arizona and simplifies the process for existing out-of-state companies to relocate to Arizona.

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