Control. Some of us feel controlling every aspect of a situation is the key to success. For others, control equals at worst a burden, or at best an unnecessary distraction. When it comes to your organization's off-campus sites, which situations merit control of a property and how much control is desirable under which circumstances?

As with people, the desire or need for control varies among organizations. Part of this variation is attributable to organizations' varying philosophies regarding the allocation of resources. If using other people's money is a key operational mantra, then that organization has already accepted some ceding of control. After all, every loan is accompanied by some operational requirements or restrictions. Similarly, if an organization has embraced outsourcing as a means of leveraging both its human and capital resources, it too has already made peace with the concept of relinquishing some control.

So in real estate what do we mean when we talk about control? There are two basic areas of control:

1. Physical - this includes the actual structure, grounds, parking areas, plus the property's mechanical and electrical infrastructure. Does your organization want to control the look and quality of the common areas in addition to the space it occupies? Does it want responsibility for completing repairs, plowing the parking area and cleaning the common area bathrooms?
2. Financial - this encompasses all operating costs and the cost of capital improvements. Are decisions about financial expenditures under your control, or are bills yours to pay without an ability to limit? Are the operating costs of this location significant, or are the premises and the resulting financial exposure so small that the time and effort expended in managing the property is not worth any potential cost savings?

In real estate the range of control parallels, or is coincidental, to the spectrum of occupancy structures. The highest level of control is obtained by owning a property outright, no mortgage or partners; and the lowest level of control is obtained by leasing a small suite in a multi-tenant property. There is a broad range of leasing structures, among which the level of control also varies. The types of leasing structures suitable to a particular situation, and therefore the degree of control available to an organization as a tenant, depend on the following factors:

• Size of the leased premises relative to the property of which it is a part. In a single tenant property the tenant has the opportunity to obtain control over most if not all aspects of a property's operations. In multi-tenant properties tenants typically have no input or responsibility for financial decisions or those impacting the physical plant. The only exception is when there is an "anchor" tenant occupying a significant portion of the rentable space.
• Lease Term. The longer the term of the lease the greater the opportunity to obtain decision making control over the physical plant and financial operations.
• Financial strength of the tenant. A landlord will be hesitant to cede control over any aspect of a property to a tenant lacking the highest levels of credit worthiness. If a tenant controlling a property fails to maintain the physical plant or pay the real estate taxes, it will ultimately cost the landlord more to correct these failures than if it retained responsibility for these obligations.

It is the interplay of these three factors, rather than the existence of any one, which will ultimately determine the opportunity a tenant has to gain control over some aspect of a particular leased property.