Greetings!
To all you enjoying the mild winter we are experiencing in Northern Illinois, Happy New Year! It is not too late to make a New Year's Resolution(s) if you have neglected to do so. We are constantly being called to change ourselves to improve. If your resolution involves making a location addition or relocation, it has never been a better time. This letter will talk about what you need to do if your lease is expiring this year, a brief market update, and finally some ideas for landlords to stay profitable in a down market. |
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Is your Lease Expiring in 2012? | |
What do I do if my lease is expiring in 2012 or I am on a month to month arrangement? Here are some tips to help you get started.
- Review your lease - read your lease over thoroughly to understand your expiration date, when and if you have to give proper notification to your landlord. Do you have any renewal options, if so how and when do they have to be exercised? What is your current relationship with your landlord? Is it cordial, strained, adversarial? Obtaining answers to these questions is very important.
- Analyze your financials and human resource needs. Look at your revenues, expenses, and employment changes. Do you see a pattern of increasing/decreasing revenues and profits? Do you know why this change has occurred? Has your business focus changed as a result of this? Do you have more/less employees today than you had 3/5 years ago?
- Where are your clients/patients coming from? Do your clients come to you or do you go to them? Plot on a map or aerial where these clients/patients live or commute from in relation to your current location. Should you move your office closer to your most profitable clients or closer to major interstates, rail-serve areas, etc...You may decide adding a satellite office or moving your current location to a more strategic spot may be in your best interest.
- Is your current space meeting all your needs? Can your space be modified? Can you move into adjacent space? Is your landlord making proper operational and capital improvements to the building? Understanding answers to these questions will help you determine if you should consider a new location.
- Is your contract rental rate at current market? Understanding where the market is at in relation to your current lease rate will help you to understand your potential cost of occupancy. This will give you leverage with your current landlord or intelligence as how to negotiate on another space.
CALL TODAY TO DISCUSS YOUR SPACE NEEDS! |
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Market Overview |
2012 should be a year of transition as commercial markets are approaching the New Year with cautious optimism. According to Commercial Connections, a quarterly newsletter put out by the National Association of Realtors, business spending has risen in each successive quarter in 2011. They also reported a slight drop in unemployment, with growth seen in both education and health sectors. The NCREIF (National Council of Real Estate Investment Fiduciaries) which is an index made up of class A properties in the 4 major sectors (Office, Retail, Industrial and Apartment) reported 3rd quarter 2011 index returns of 3.3%.
At the local level and at TDCRE
we started to see tenants and buyers come back into the market in late 2011. Closings and transactions initiated more than doubled and inquiries on listings rose over 70% from 2010 to 2011, year over year. Business owner's moods, in general, seem to be more positive than this time last year. Vacancy is still high over most of the markets I serve, but more deals are getting done, thus reducing the vacancy and increasing demand for space slightly. There is no new speculative construction in the offing so absorption will continue to strengthen. Rental rates are still very affordable and aggressive landlords are still offering nice incentives for quality long-term tenants.
I am also cautiously optimistic that 2012 will better 2011.
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Maximize Landlord Profits in a Down Market | |
As a landlord myself I understand the pressure we are under to compete in today's market for quality tenants, but not give "away the farm" for luring them to your building. Owning real estate can seem like the last thing you'd want to be invested in today, however, good quality real estate is still producing nice returns for savvy owners. Furthermore, being aware of ways to maximize your profits and keep your property viable without spending lavish amounts is crucial. Commercial Real Estate still provides excellent benefits for current cash flow, appreciation, tax benefits, and to hedge against inflation. Here are some ideas that you may consider.
- Real Estate Tax Reduction: work with your local township assessor or county personnel to obtain a favorable reduction in assessed value.
- Analyze all your expenses and try to negotiate better terms with vendors.
- Consider short term leases to fill space with good fit tenants that requires minimal TI.
- Keeping a log of recent comps of comparable properties to attempt to be competitive and understand the market: A knowledgeable broker understands the rental rates and tenant improvements that the surrounding area is offering. This will help you make an educated analysis of what you should be offering as a landlord.
- Look at your lease to make sure you are protected: Make sure you are aware of the dates that the lease contains on exercising any lease options.
- Use a knowledgeable broker: A knowledgeable broker can help you to understand the current market conditions and rental rates. Don't loose a tenant because your proposal is not indicative of the surrounding rental rates.
- Finding stable tenants who will renew their leases: A knowledgeable broker can assist you in analyzing a tenants financial position. A long term, stable tenant will increase profits in the long term.
- Collecting rent on time to increase profits: Stay on top of collecting rent. This will improve your cash flow for the property.
- Maintaining the property to enhance its value: The condition of the property is an important factor when tenants are looking for new space. Maintaining the building can provide long term profit by attracting new tenants and keeping the existing ones.
- Dealing with tenants professionally for mutual respect: Tenants want to be heard and feel that the landlord is listening. You might not always agree with the tenant but by keeping communications open, the tenant feels respected which can go a long way with negotiations.
- Understanding tax and accounting issues for the best return on your investment: Taxes play a large part in rental rates. If you recently incurred a lot of vacancy, you might be a candidate to dispute your taxes. Thus, long term, increase your revenue.
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Featured Listings
518 Lake Street - Aurora, IL
Great property for user/investor. (Add'l Lot Included)
9,936 S.F. Retail/Warehouse Building on 2 Levels
2,516 S.F. Retail Space For Lease
Located @ Stoplight Corner of Lake & Prairie-3 Blocks South of Downtown Aurora Redevelopment
NWC Highland & Illinois - Aurora, IL
Commercial, Office or Industrial Potential
Commercial Lot (100 x 132)
Zoned M-2 - Near Northwest Side of Aurora
Dense Demographic Area - Close Proximity to Shopping, Medical & Interstate Access
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Third Day Commercial Real Estate
Negotiates 2 Leases in Month of December
Oswego, IL - Third Day Commercial Real Estate announces its closed transactions for December 2012.
Third Day Commercial Real Estate negotiated a lease for 1,300 square feet of space at 1158 Prairie Street in Aurora. The new tenant, Headquarters Barber Shop, was unrepresented in the transaction while the landlord, JNA Investors, was represented by Third Day Commercial Real Estate. Headquarters Barber Shop is a recently licensed barber owned by Brian Weaver. They have signed a long term lease with options to make additional improvements and substantial TI provided by the landlord.
TDCRE also closed a lease for 125 square feet of office space located at 2580 Foxfield Road, Suite 101, in Saint Charles. Third Day Commercial Real Estate provided dual representation to the landlord and the new tenant, Dr. Carolyn Werneke, Psy. D. Dr. Carolyn Werneke, Psy. D. is an experienced psychologist focusing on children services. She has signed a short term lease for this office location. |
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Third Day Commercial Real Estate
Members of:
Some Clients I have Served:
- Union Health Services, Inc.
- Blackline Consulting, LLC
- Lighthouse Financial
- MedCom Group
- St. Charles Executive Center, LLC
- Dr. Michael Tierney, DDS
- Legacy Clinical Consultants, LLC
- Platinum Technology Resources, LLC
- Stumm Insurance, LLC
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Quick Links
We are still seeking space for the following buyers and tenants:
1) Experienced Chiropractor - seeking 1,500-2,000SF of retail space to lease in Schaumburg, Wheaton, Lombard or Glen Ellyn. Late spring occupancy.
2) Experienced Contractor - seeking 5,000-10,000SF building to buy. Needs 14' OH door, 16' Ceiling Heights, outside storage and some office space. Aurora, Oswego, Plainfield, Naperville areas.
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Voice of the Client:
What commercial real estate information would help you make decisions in your business? Here are some examples of what clients would like to know:
- "Comparables on recent transactions and the economics of each deal."
- " Who are the new users and developments coming into the area (before they move in) like new data centers."
- "Available financing and who is providing it."
Tell me what you would like to know about commercial real estate that would help your business!
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At Third Day Commercial Real Estate our mission is to provide commercial real estate clients and prospective clients the highest quality professional service allowing clearer decision-making through sound, accurate market research and financial analysis. Specializing in tenant and landlord representation, and property disposition for individuals and entrepreneurial companies seeking expertise in office, medical and warehouse property. Third Day delivers honest thorough advise, timely communications and high morals. We serve the far west suburbs and are dedicated to building long term relationships.
If you or an associate is looking for professional advice in the field of commercial real estate and would like to speak to me about how I may be able to help, please call or e-mail me. I am looking forward to the opportunity to serve you.
Sincerely,
Nick Weis Managing Broker Third Day Commercial Real Estate 23 W. Merchants Drive Oswego, IL 60543 630-897-8345 |
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