Zukowski, Rogers, Flood & McArdle

One of the most exciting times for a business owner is when moving into a new space.  It can also be a time that one looks back on with the most regret.  Whether moving your business from your basement to a space that is more production friendly or simply moving from an existing space to another, negotiating a commercial lease can be one of the most important things a business owner does.  Both from a top line, especially if you are a retail owner, and a bottom line perspective, your lease has huge financial consequences for your business.

While residential leases are fairly generic and contain (either within a standard form or through state law) protections for the consumer, commercial leases are more open-ended with a lot of flexibility and are essentially caveat emptor (let the buyer beware).  That can be scary, but also provides an opportunity for a tenant to make its lease right for them.  Prior to searching for a property or negotiating the lease itself, rank your priorities - location, rent, length of term, tenant improvements, etc.  The ranking of that order will partially be dictated by the type of business you have.  A manufacturer will value having a certain amount of space and loading docks and care less about the location itself or the aesthetics of the building.  Conversely, a restaurant might care about what tenant improvements already exist in the premises or how much the landlord will agree to provide for buildout.

The building is owned by Optima International, who has made a minimal investment in the property over the years, and in 2014 they reportedly stopped paying real estate taxes and heating the property. 

The property consists of a two-story 619,590 SF manufacturing building; a 355,515 SF distribution center; a five-story office building; a 2-story services building; and warehouse space, according to Ten-X.com, the auction house that is handling the property along with broker Jones Lang LaSalle. This is a potentially huge deal for Harvard and McHenry County, and all eyes will be on this auction, which will be online April 18 to April 20. Viewing of the property will be April 15. Starting bid will be $2.7 million. Call one of our brokers if you have interest.

National vacancies fell by 20 basis points in the 4th quarter, ending the year at 16.3 percent. The 20 basis point decline in vacancies is, though quite modest based on historical standards, the greatest pace of improve-ment in fundamentals for the office sector since the recovery began in 2010. Overall, vacancies fell by 40 basis points in all of 2015, suggesting that momentum in office fundamentals is building.

Asking and effective rents both grew by 0.8 percent in the fourth quarter, and by 3.1 and 3.2 percent respectively, throughout 2015. That is the best annual performance for asking and effective rents since the recession; the recovery for office properties has very much mirrored the slow growth of the overall economy, and it's a shame that now that office fundamentals appear to be improving better - we appear to be running into more economic headwinds.