1. Inventory the files on each off-campus holding, both owned and leased.
2. Each file should include: a)  fully executed legal documents, including but not limited to leases, deeds, and partnership agreements; b)  insurance information; c)  contact information for the landlord, property manager and occupants; and d) plot plans and real estate tax assessments.   
3. Set-up digital files for each site with copies of all of the before mentioned items.  
4. Save digital copies of all new documents as they are executed, whether lease amendments, modifications to condominium documents, etc. 
5. Include digital photos of each property and your improvements.
6. For each site have a list of the service and vendor contracts/contacts.
7. Make  an operating budget for each site (these should correspond to your organization's fiscal year).
8. Reconcile operating expense pass-throughs and charge backs from the landlord.
9. Set-up and/or audit a tickler file.  A missed extension or termination date can be extremely costly.
10. Become proactive in managing your real estate holdings and planning for the future!   

Negotiations are always interesting, sometimes tough. Two parties, each with their own agendas, both trying to reach a common ground: the proverbial "win-win" situation.

STEPS TO SUCCESS

How easily a successful outcome is reached, frequently depends on more than just the parties' stances on issues. A negotiator with a more negative approach to situations will define issues as obstacles, while someone with a positive outlook will view the same issues as negotiating points. Entering a negotiation with a view that common ground can be found is probably the most important predictor of a successful outcome.

So short of giving your counterpart across the table a lobotomy, or saying yes to all of their demands, what steps can be taken to increase the likelihood of a successful outcome? There is a whole sub-genre of business literature on negotiating. This article's goal is not to replace those books, but rather provide advice specifically tailored to those whose day job may be facilities management, support services, or even strategic planning, but occasionally find themselves negotiating a commercial real estate transaction.

FIND THE COMMON LANGUAGE AND THAT'S USUALLY $ AND ¢

Its not unusual for negotiators to loose sight of what it is exactly they are trying to accomplish. They take positions on various issues and tend to view each issue as a stand-alone item, forgetting how the issues are interrelated. Tackling the issues one by one, as if on a checklist, clouds the big picture. In general, most issues ultimately impact the size of the parties' financial obligations. By understanding the financial implications of an issue as it relates to the larger deal, an agreement can typically be reached.

The financial terms of a transaction: purchase price, rent, operating expenses, tenant improvement (TI) funds, are easy to understand. When negotiating these items, the language is dollars and cents and the agreement determines who pays what. Remember, all financial issues have mirror-entries on both the landlord and tenant sides of the ledger, and funds on a specific side are fungible.  

Here is an example: ABC Pediatric Hospital is negotiating a new ten-year lease for a primary care outpatient facility located in a multi-tenanted building. The lease will require a total renovation of the space. The landlord has offered a $20 psf gross rent and a tenant improvement allowance of $40 psf towards an estimated improvement cost of $80 psf.   ABC's occupancy costs consist of both rent and the portion of TI it will need to fund out of its own resources, so ABC wants both a lower rent and a larger TI allowance.

Since both a rent reduction and an increase in the TI allowance are a "cost" to the landlord, the size of one will impact the size of the other. It will not be a dollar for dollar trade-off, since the landlord's TI contribution is amortized over the term of the lease. However, the amortized cost of the TI will be viewed on a dollar for dollar basis against the requested rent reduction. If the cost-of-funds are the same for both ABC and the landlord, there will be no financial advantage in having one party provide more TI funds versus the other. The two parties are negotiating what their total cost will be, and for the most part how those costs are distributed among the various categories will not matter.

Most deal points involving control are also a dollar and cents discussion. In this case, however, the amount is unknown. Each side makes some sort of expected value calculation (the likelihood of the event occurring times the potential cost) on which it bases its negotiating stance. Example: which party should be responsible for tenant improvement cost overruns? ABC will not want to be responsible if the contractor is hired and supervised by the landlord, it will have no control over the outcome. If, on the other hand, ABC hires the contractor, the likelihood of these overruns occurring is diminished. Other examples of control questions with a financial ramification are: HVAC costs (who controls the thermostat), responsibility for cleaning and service contracts (who has more clout with the vendor) and assignment  and subletting clauses. 

Are there ever negotiating points which aren't ultimately a financial issue?  Of course, and frequently these are items which impact a tenant's ability to effectively conduct its business.  Examples of these "non-financial" issues include:  exclusivity clauses, building signage, and hours of operation. These issues also impact the ability of the landlord to attract and/or retain other tenants, so agreement will in large part depend on the size and duration of the lease.  Be realistic, if you are leasing 5,000 square feet in a 80,000 square foot building you will have less leverage in negotiating these items then if your lease covered 50,000 square feet.  

Finally remember, the terms agreed to in a letter of intent probably represent ninety-five percent (95%) or more of the financial aspects of the transaction.  As a business person it is imperative you remain involved in the negotiation of the lease document. The devil is in the details, and the final lease language will impact occupancy costs.  A difference of just $.05 to $.10 per foot becomes meaningful when added to similar cost savings across the lease, and extended out over the term of the lease.