 |
|
|
 |
 |
|
|
July 2009 |
Miller, Rubenstein,
Hoffman & Hawkinson
|
|
Timing right for renegotiation
 Landlords nationwide are now turning their focus inward
from tenant prospecting to tenant retention, as it appears they will be enduring a challenging market for several more quarters.
As a result, a window has opened for tenants to renegotiate existing leases.
A successful lease renegotiation should be offered the same amount of time to plan as a typical relocation. Even if the intent is to stay put, albeit with altered terms, it is critical to work with your tenant representative to survey the
market and leverage your tenant rep's transaction insight to peer into any recent transactions.
Keep in mind that your landlord is unlikely to improve your lease just because of a soft market and thus, will need to also receive value from a renegotiation. In order to best position itself with a current or future lender or investor,
your landlord must be able to demonstrate long term stability in its rent roll. So the better your credit, longer your lease term extension and the larger your square footage requirement, the more security you can offer your landlord.
Tenants that have been in place for a significant period of time and demonstrate a superior level of tenancy will most likely be a high priority lease for a landlord, even with several years of term remaining. Additionally, if you are a
large enough tenant with established local name recognition, your landlord can likely benefit by leveraging your notoriety with other tenants seeking to remain in place as a result of their high profile neighbor.
Every case is unique. Much of your success in a renegotiation will depend upon your space requirement, the status of the building's occupancy and the health of the surrounding market. Challenge your tenant rep to leverage your situation
to make significant improvements in your current lease agreement. However, remember that your success in renegotiation will be directly related to the benefits you can offer your landlord in return.
|
|
Will the Big Apple turn green?
 New York City Mayor Michael Bloomberg is having a hard time
selling landlord constituents on a recently announced environmental effort to make the city's iconic office buildings more energy efficient as result of citywide skepticism of any long-term benefit to building owners.
Opponents to Bloomberg's plan see green improvements providing value only to tenants and a "mandate" for building upgrades in the face of a very soft market. Moreover, property owners are also citing that banks are reluctant to finance
green-oriented renovations as well. Bloomberg's approach puts the onus solely on the building owners in the midst of an historic global financing drought.
The specific plan calls for green audits of subject properties that once complete, will provide landlords with a blueprint to green their building. However, with almost no city resources in play to incentivize property owners, Bloomberg
has instantly built a barrier to the effort's success.
Bloomberg may have helped his case with city building owners had he studied what went on in San Francisco just a year ago. In 2008, Mayor Gavin Newsom announced a very similar effort that would require large office and residential
properties to obtain LEED certification. At first heralded for the effort, Newsom found opposition in several real estate organizations because of the rapid timeframe put in place. Only after months of negotiation did an agreement arise to
phase in the regulations by 2012, as opposed to making them immediate. As a result of the accord, the standards are now law and being met with enthusiasm by Bay-area office tenants and green-savvy landlords.
It is safe to say that what's happening in our major cities relative to instilling a more comprehensive green mentality is a sign of what lies ahead for the commercial real estate industry on a national level. Hopefully, a balance between
municipalities and building owners can be found, as a landlord does not have to look hard to uncover substantial financial benefits as a result of green retrofits and operational improvements.
|
|
McDonald's reaches LEED platinum certification
 Only 126 buildings in the world have been award the U.S.
Green Building Council's platinum level of LEED certification. Of those, only 16 have accomplished it through modifications to existing buildings. The latest to do so is the global headquarters of Big Mac maker McDonald's.
The most impressive facet of the green retrofit was that it was done for only $150,000. Considering original construction was done in the 1980s, the project should fast become a national case study in real estate energy conservation.
The company benefited tremendously from existing on-campus water sources that were converted to landscape irrigation systems. The three-story central office already had an open floor plan so the addition of floor-to-ceiling windows now
provides extensive natural lighting. The existing underground parking garages, which impact the environment less than surface-level paved lots blamed for reflecting heat into buildings, also added to the USGBC certification.
While the original construction significantly helped McDonald's obtain the high level of certification, new investments were made in lighting technology. Most notably, adjustable light-level fixtures were installed to dim artificial light
sources by 50% on bright days in conjunction with light-reflecting ceiling tiles. The popular compact fluorescent lamps and bulbs were ignored in favor of LED lighting that can last longer, despite costing more up front.
The company also began recycling oil from its test kitchen to power on-campus shuttle services and implemented employee incentive programs to reduce waste campus wide, a major component of any successful sustainability program. Given how
little was invested, the return on the effort is expected within a year.
Between employee programs and existing structures, McDonald's' success in greening their headquarters could demonstrate to companies nationwide that reducing commercial real estate's impact on the planet is not that far out of reach.
|
|
|
|
|
