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About TMC-TheMahrCompany

Value added Commercial Real Estate Services Based in Tampa, primarily serving Florida markets, TMC-The Mahr Company offers a unique blend of expertise and disciplines. TMC specializes in User and Landlord representation for Office, Commercial, Medical, Legal/Attorney and Investment Properties, as well as: •Acquisitions and Dispositions •Land and Site Selection •Special Projects for Clients

10 Tampa Bay places to watch in 2014

10 Tampa Bay places to watch in 2014 – By:Chris Wilkerson Deputy Editor-TBBJ

Sourced by Tampa Bay Business Journal

1. Hyde Park Village sold for $45 million in 2013 to WS Development in Boston. Expect to see the new owners begin to put their fingerprint on the retail and restaurant destination in 2014.

2. St. Petersburg’s iconic waterfront has been under the microscope of city planners and the Urban Land Institute is expected to present a final report in January 2014.

3. Florida State Fairgrounds’ governing board is considering developer pitches and could choose one this summer that would allow for some construction on the valuable land to help raise money to repair existing infrastructure.

4. Channelside Bay Plaza looked like it was on the road to recovery in 2013 when the Port of Tampa agreed to buy the property outright for $5.75 million and then see what could be done to reinvigorate it. A new lawsuit from Liberty Channelside LLC alleging that the port purposefully spiked Liberty’s offer on the plaza will likely delay any resolution at Channelside while the court considers the suit.

5. Nathan Benderson Park’s world-class rowing facility is complete and boosters already have booked national and international regattas in 2017 and 2018. The park’s management is working to fill the calendar between now and then to help show that the $40 million investment can pay economic impact dividends.

6. A well-rested piece of dirt on Westshore Boulevard just north of Gandy Boulevard that once was home of Georgetown Apartments has the potential to sell in 2014. It has been seen for years as one of the most valuable development parcels in the region. If it sells, how the parcel develops bears close watching for insights into current trends in commercial and residential real estate locally.

7. A proposed site for future Raymond James Financial Inc. expansion in Pasco County is worth watching in 2014. The company has an agreement to purchase 65 acres that could hold as many as six four-story office buildings, and the project has seemingly been slow to evolve.

8. Bill Edwards bought St. Petersburg’s defunct Baywalk downtown shopping center with dreams of bringing it back to life. It’s hard to argue that Baywalk is the center of his attention since he had to significantly scale down his Mortgage Investors Corp. in the face of new federal regulations and he just bought the Tampa Bay Rowdies. Edwards and his team have been methodical in its search for the right tenant mix with the hope of turning things around.

9. The Mall at University Town Center opens in October 2014 and will change Sarasota’s retail landscape. Several anchor department stores will leave other malls in the area for UTC.

10. The long-stalled Cypress Creek Town Center in Pasco County could be under construction as early as summer, 2014 – this time as an outlet mall, published reports show. Environmental litigation held up the project at State Road 56 and Interstate 75 for years. Simon Property Group could have the mall ready to open in summer 2015.

Link

Happiness Health and Well Being for 2014 from TMC-The Mahr Company

Emerging Trends  Sourced by the ULI [Urban Land Institute]

Commercial real estate is reaching an inflection point where “valuations will no longer be driven by capital markets.” In 2014, Emerging Trends interviewees expect “space market fundamentals and property enhancements to emerge as the primary drivers of total returns,” reducing the reliance on falling capitalization rates and high amounts of leverage.

The real estate recovery will gain momentum in 2014. This should be good news to an industry that has experienced a recovery of fundamentals that has been much slower than it is used to after a recession. In fact, the pace of the recovery can make it difficult to spot the signs of improvement until they are in full swing. At first glance, many of the trends identified for 2014 are similar to those identified in previous years. These trends were relevant when originally identified, but the slower pace of this economic recovery prevented them from coming to fruition in the expected time frame. The difference for 2014 is that the market has progressed further through the economic and real estate cycles and we are now seeing real evidence that the trends have the momentum to finally make an impact on the real estate market.

The real estate market continues to move through the recovery phase of this cycle. The trends identified for 2014 portend both opportunities and challenges for investors in 2014. Economic and demographic changes will drive demands for real estate that are familiar and some that will require the industry to adapt. Equity and debt capital will continue to be attracted to the asset class, and the deployment of this capital will include more investment strategies that will involve a wider set of markets and property types. The economic recovery is projected to continue in 2014—and with it rising interest rates. The expected impact of rising interest rates ranges from little to potentially leading capital to flow into alternative asset classes. Despite the wide range of opinions, everyone is convinced that the search for returns through cap rate compression will become the search for returns through improving fundamentals and/or operational improvements.

The year 2014 may well be the year that the real estate markets “recovers from the recovery.” Real estate professionals interviewed for Emerging Trends expect growth to be sufficient to generate consistent and growing demand for commercial real estate across all property types. As one fund manager says of the moderate 2.5 percent gross domestic product (GDP) growth in the second quarter of 2013, “That is not huge, but it is enough to create demand for real estate product—that is, demand for space and improving rent—because at the same time there’s almost no new supply. It’s a sweet spot for real estate.” An economist notes, “We have a new paradigm here. It is not the kind of recovery we have seen before with 250,000 new jobs a month. It’s a recovery with 100,000-plus jobs a month.”

“With the economy in a position where the tailwinds are now stronger than the prevailing headwinds, 2014 should be a year when we see real estate fundamentals improve in sectors beyond the already very healthy multifamily sector—and in a number of markets—to a point where we could see above inflation rate rental growth,” says a fund manager. According to Emerging Trends 2014 interviewees, the tailwinds include “good if not great” job growth—in industries that are, by no small coincidence, magnets for commercial real estate investment (energy, technology, health care and biological research, and, to some extent, education and financial services)—solid corporate profits, and a recovery in the housing market. These tailwinds are expected to trump the headwinds, which include a “stubbornly high” unemployment rate, uncertainty over government regulation and fiscal policy, and concern about the rising cost of debt capital.

The expected breadth of the recovery is illustrated by the view of Emerging Trends survey respondents toward the outlook for real estate business prospects. Prospects for almost all types of real estate businesses were rated more optimistically for 2014 than in last year’s survey for 2013. The improvement in business outlook was most significant for homebuilders, for whom prospects are not only expected to be significantly better than last year but whose prospects have more than doubled in the past two years. As a result, homebuilders have moved from the weakest real estate businesses in 2012 to one of the strongest in 2014. Business prospects for commercial bank real estate lenders and commercial mortgage–backed securities (CMBS) lenders and issuers also improved noticeably.

Trending: Big Idea for 2014: Banking Goes Virtual

Big Idea for 2014: Banking Goes Virtual

December 10, 2013                                                                                                  

“Banking is essential. Banks are not.” — Bill Gates

In my quaint little New Jersey town, the eponymous Maplewood Bank & Trust once literally provided the pillars of the local community. Near the center of the main commercial thoroughfare, the building’s Corinthian columns rise toward a facade where the institution’s name is carved in stone.

That’s all that is left of the bank, however. As the financial landscape shifted, it long ago went the way of thousands of other defunct small banks.

Change is nothing new to banking, but it is likely to come faster and with more fury than ever in the coming months and years. That’s because money, like the written word, is ideally suited to existing and traveling in electronic form. Now, the digitization of dollars is giving birth to a giant wave of innovation. Here’s one impressive piece of evidence: mobile banking transactions grew 50% in the past year alone.

“Banking in the future will be something you do – not some place you go,” American Banker columnist Jon Matonis wrote recently.

For many, it already is. Never before have customers had so many choices of where to lend, borrow, store and transmit money. These days you can even hold your wealth in a form of tender that’s untethered to a government or physical form.

Bitcoin, the digital currency, is making inroads and creating big-time buzz. Its rise leaves bankers in a quandary. They can help foster a fast-growing market that’s making their regulatory overseers queasy or stick to the sidelines as Silicon Valley startups, retailers and others blow past them.

The story’s the same in many other quarters. Outfits like Lending Club are cutting banks out of the credit market (a sliver of it, anyway) by providing lenders and borrowers with a virtual marketplace in which to meet.

In the payments world, startups like PayPal, Square and Stripe have grabbed the initiative, enabling customers to zap money from point A to point B without ever thinking of a bank.

When it comes to storing money, Google and other nontraditional payments players are pressing ahead with digital wallets, which are already in use by 11% of online consumers. Elsewhere, disruptors like Green Dot and Bluebird, the American Express-WalMart joint venture, offer prepaid cards that act as checking accounts without the traditional baggage of paper checks, statements and tellers.

All this tumult will cost full-service banks in the neighborhood of 35% of their market over the next seven years, figures the consulting firm Accenture. Translation: if Accenture’s crystal ball is clear, banks will lose more than one-third of their business in less than a decade.

“Digitally oriented disruptors that are far more agile and innovative” and are the likely winners, Accenture says.

For incumbent banks, there are rays of sunshine. As the cornerstone of the nation’s payments network, they still have a built-in edge. For institutions that grab the initiative, it could lead to new business, like using their secure networks to become the keepers of digital credentials and other data–a role that’s already emerging in Canada.

Change also offers a chance to rethink their giant branch investments, from a place where paper passes back and forth to one where live people add value in ways that that digital zeros and ones can’t.

Banks won’t go away. Neither will bricks and mortar. But ten years from now, today’s brick-and-mortar banks, and digital banking services, will look like quaint vestiges of a bygone era.

Neil Weinberg is the editor-in-chief of American Banker. The views expressed are his own

MAJOR Impact to the growth and continued viability of Tampa Bay “New vision for Tampa International Airport Cleared for Takeoff”

TAMPA — Tampa International Airport is poised to undergo its most radical changes and extensive construction since the main terminal opened in 1971.

Joe Lopano CEO, unveiled the future of Tampa International Airport on Thursday.

The new $2.5 billion master plan does more than just expand and modernize the 42-year-old airport for the coming years and decades.

It’s also a new flight plan for the way TIA will do business.

“The old paradigm for the airport was that the airlines will grow, we’ll just sit back and keep the bathrooms clean,” Lopano said. “Times have changed. It will never go back to what it was before.

“Now airports are seen as big business. It’s a new paradigm.”

The airport’s governing board, the Hillsborough County Aviation Authority, unanimously approved that new paradigm.

The new master plan sets the stage for three phases of construction and expansion by 2041, Lopano said.

The consultants who drafted the new master plan focused on the immediate and long-term needs of an airport showing its age in a plan that can be built in phases.

Change will come quickly. The first phase is set for completion in fall 2017.

“This is not a plan five years on the shelf,” Lopano said. “This is a plan of action that starts today.”

The first phase is the decongestion phase, as the airport tries to reduce traffic and parking congestion and free space in the main terminal for the next phases.

That phase started in December, when the airport banned curbside idling in the arrival lanes. Doing so could extend the life of the terminal’s curbs and roads by another 20 years.

TIA will also build a consolidated rental car facility, or ConRAC, along the southern edge of its property, near the economy parking garage and airport post office. A new automated people mover will link passengers to the main terminal and the new rental facility 1.3 miles away.

The facility will serve two functions: moving the rental car counters and cars from the main terminal frees space for future expansion and opens up the parking garage. It will free 1,200 long-term garage parking spaces and get 8,500 rental cars off the road a day. Then the airport will build out the four corners of the third-floor transfer level, adding 50,319 square feet.

Lopano has called the new 2.3 million square foot facility an “airtropolis” — a hub the airport could commercially develop with restaurant and retail space, car rental counters and a parking garage, maybe even a new airport hotel. The nearby mall, International Plaza, is 1.2 million square feet.

Projected cost of this phase: $841 million. It should be done by fall 2017.

• • •

The second phase sets the stage for the third: demolishing the Tampa Airport Marriott and the control tower to expand the terminal and build a new international airside.

Projected demolition cost: $452 million. It should come down between 2018-2023.

In phase three, the terminal would be expanded north at three levels: The ground floor would be a new international curbside; the second floor would hold customs and immigration; the third transfer floor would be a security area for an expanded Airside C and a new Airside D. The artist’s rendering envisions a glass structure overlooking the new airside and new control tower.

“This is the future of Tampa,” Lopano said.

Two new automated-people movers would stretch north from the expanded terminal. One would link to the brand-new Airside D, which would be built in the northwest corner of the main terminal alongside an expanded Airside C.

Construction of this last phase would take place between 2020-2028, but not until Tampa International has the number of international passengers and flights needed to justify it.

Third phase projected cost: $1.2 billion. By that time, consultants estimate the airport will be handling 34.7 million passengers annually.

• • •

Lopano also talked about plans to expand the airport beyond the airport itself, connecting it to whatever mass transit systems emerge in the bay area.

TIA hopes to connect the new automated people mover to the proposed Westshore Multimodal Center that state planners hope to one day build in the Westshore Business District along Interstate 275.

The Florida Department of Transportation has decided such a hub must be built to accommodate future transportation systems — and the airport wants to be a part of that.

In the end, Lopano sees a transformed airport serving a transformed area.

“We need a new way to think in Tampa, to grow this business,” he said, “and we’re going to do that.”

Market Analysis: “A Stronger Asset” from CCIM Institute

New sources of capital and increased demand have strengthened the commercial real estate market.
by William Hughes

The current economic landscape has assembled an array of factors to structurally change real estate investment standards. The intertwining of the U.S. and global economies, deeper integration of liability and equity markets, and the accelerated adoption of real estate investment trusts and commercial mortgage-backed securities as major components of the sector have all contributed to this evolution. Furthermore, increased access to a variety of capital sources, combined with a multitude of real estate investment vehicles, has resulted in real estate investment earning its place as a mainstream asset class.

For today’s real estate investor, advanced facts and figures, deeper liquidity, and a range of broad investment opportunities that reach beyond merely primary metros have all allowed the further mitigation of risk. As supply cycles continue their two-decade trend of stabilization, the sector remains less volatile as a whole. Convergence of these influences has refined the foundation for attractive real estate cost positioning, resulting generally in falling capitalization rates over the last 20 years.

Cap Rate Movement

Typically, cap rates are inclined to stay range-bound during economic inflection points, with a usual variance of between 100 and 130 basis points. Whereas the length and severity of the the 2009 Great Recession and the 2001 Recession were markedly different, the recovery trends of cap rate performance proved surprisingly similar.

During the peak of the financial crisis, cap rates expanded from 6.9 percent to 8.1 percent between 2007 and 2009 before making a remarkably accelerated recovery, especially given the depth of the recession, according to figures from Real Capital Analytics, CoStar, and Marcus & Millichap Research Services. While the annualized yield on the 10-year Treasury declined 280 basis points to 1.8 percent between 2002 and 2012, the mean annualized cap rate for all property types dropped 150 basis points. Since the end of 2012, the 10-year yield has abruptly expanded 100 basis points to 2.9 percent as of September 2013. In evaluation, the mean cap rate proved more steady, edging down only about 10 basis points to 7.2 percent. While a delayed effect is still a possibility, forecasting the potential magnitude requires deeper analysis.

Throughout the Great Recession, the Federal Reserve has held the federal funds rate to nearly zero while infusing huge volumes of capital into the financial markets. The expanded period of monetary easing and the absence of government-supported distress sales have boosted the national mortgage market. This paved the way for cap rates and real estate values to bounce back far more quickly than in previous recessions and well ahead of an actual operating recovery. The exception to this trend occurred in multifamily properties, which recovered even faster than the other sectors.

Whereas tough credit underwriting continues to be an obstacle for potential borrowers, the Federal Reserve’s accommodative policies aimed at reducing near-term interest rate risk have aided in the refinancing and restructuring of maturing and difficult loans. This has resulted in more capital entering real estate as a comparatively sound alternative to reduced yield bonds and volatile equity markets.

A Hybrid Investment

Since the market bottomed in 2009-10, commercial real estate investors have favored the greater certainty of top-tier markets and properties with proven cash flows, despite their generally lower yields; this focus on prime markets limited meaningful price recovery to coastal and urban core markets, until investor interest began to spread a year-and-a-half ago. With most gateway primary markets having substantially recovered, occupancy and rent growth momentum has expanded to late-recovery secondary and tertiary metros. These areas may garner higher yields and offer room for net operating income gains, but they also carry higher risk. Many of these areas face relatively higher overdevelopment threats, less consistent demand, and more shallow liquidity, all of which could affect investor exit strategies. Reflecting these trends, the maturing primary markets have faced slowing cap rate compression and even rate upticks. Conversely, cap rates in secondary markets have tightened, supported by stronger operational momentum and sales volume. Naturally, investor risk will depend in part upon a market’s position along the arc of the real estate cycle and the investment time horizon.

The hybrid nature of commercial real estate makes it a compelling investment option, with a bond-like cash flow component even during economic downturns, as well as an appreciation component that often acts as a hedge against inflation, considering that property owners benefit from increasing rents and property values when inflation rises. In addition, many long-term leases contain consumer price index rent increases, while shorter-term leases allow investors to quickly adjust to market rates.

Rising Interest Rates

A period of falling cap rates helps elevate returns via appreciation. Rising interest rates — reflecting stronger economic activity — generally exert upward pressure on cap rates, requiring an increased emphasis on income growth to offset slower appreciation and higher financing cost. However, healed and expanding credit markets, strong global investor demand for U.S. real estate, and continued recovery in property fundamentals will help counterbalance the magnitude of rising rates, and lend support to property values. Having already absorbed a significant increase in interest rates, further cap rate changes should tie less to speculation regarding Fed policy and correlate more with measurable economic performance.

Debt and equity markets should remain stable for the foreseeable future. However, the environment is not without risk, and near-term volatility should be expected. The pending appointment of a new Federal Reserve chief, looming debt ceiling discussions, geopolitical tensions in the Middle East, and the effects of sequestration and declines in federal spending will hamper economic growth.

In addition, changes in monetary policy always present a risk to the economy. In this light, the Fed has demonstrated considerable dexterity, and should gradually exit qualitative easing in an orderly manner by slowly decreasing bond purchases and letting some securities mature. The Federal Open Market Committee has issued interest rate guidance, stating that the federal funds will remain range-bound between 0 to .25 percent at least until mid-2015, underscoring that monetary tightening would begin only after an economic and employment recovery has been well established. The Fed also noted that the tightening process would occur at a more gradual pace than historical precedent. 

Surely, higher interest rates will impact investors across the board. As financing costs rise, so will investors’ required returns. At a minimum, increased financing costs will decay some of the cap rate arbitrage of buying into secondary and tertiary markets, or value-add and opportunistic assets. However, the stride of occupancy and lease growth is likely to exceed that of primary markets and core assets for the midterm outlook. Demand for all commercial real estate, sustained by the reinforcing economy, remains solid, and supply risks are negligible for most property types. As a result, performance profits and other components will considerably counteract the effect of rising interesting rates, at least for the near term.  William Hughes

Amazon Unveils Flying Delivery Drones – This Will Be The Beginning of Changes to Distribution on Many Levels

http://cbsn.ws/1j9sVLw

TMC-The Mahr Company Shares: This is the beginning of a Major Shift which will have a tremendous impact in the future relative to Wholesale and Retail Distribution, Warehousing, and land and locations for same.

National Flood Insurance Program Update

Posted November 22nd 2013

In 2012, the Biggert-Waters Flood Insurance Reform Act (“the Act”) was enacted. The goal of this legislation was to stabilize and revise the National Flood Insurance Program (NFIP). Provisions of the Act will roll out in stages, including some that have already occurred. On October 1, one portion of the Act went into effect which would require the Federal Emergency Management Agency (FEMA) to remove flood insurance subsidies for certain properties across the country.

Unfortunately, some of the flooding zones were inaccurately tagged so many areas are misrepresented on flood maps used by insurance companies. This has resulted in serious cause for concern by property owners because premiums increased at drastic rates without consistency among insurance providers. One of the Act’s co-authors, Representative Maxine Waters, says “inaccurate mapping” and “incomplete data [have] led to unreasonable and unimaginable increases in premiums.”

Although the Biggert-Waters Flood Insurance Reform Act significantly impacts flood hazard areas, the law poses great risk to property ownership. CCIM Institute is concerned with the significant rate increases impacting members who manage or own multifamily residential and commercial properties.

Legislation titled the “Homeowner Flood Insurance Affordability Act” (S. 1610 / H.R. 3370) has been introduced to address the exorbitant premium rate increases. The legislation would delay the rate increases sparked by the Biggert-Waters Act to allow FEMA time to provide accurate flood maps and to complete an affordability study that would look at the impact of the new rate structure.

The Affordability Act has garnered wide bipartisan support with H.R. 3370 having 138 cosponsors and the senate companion bill, S. 1610, having 23 cosponsors, as of November 21. 

If you have experienced significant rate increases since 2012, please contact the government affairs department at legislative-affairs@ccim.com.

– See more at: http://www.ccim.com/newscenter/323356/2013/11/22/national-flood-insurance-program-update#sthash.hnBZFxAL.dpuf

Strategic Leasing Can Reduce Costs for Your Medical Practice

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By Leo Griffin | June 12, 2013

As healthcare reform and Medicare funding changes unfold, physicians are paying more attention than ever to their operating expenses. In addition to patients, they must examine their medical office needs with the goal of maintaining the most flexibility possible in these changing times.

                        Strategic leasing could potentially be the vehicle to accomplishing the much-needed business flexibility. Lease terms can range from three to 10 years (the initial period having a definite impact on the rates and tenant-improvement allowance). Although rent is typically 6 percent of a practice’s budget, the expense has a tremendous effect on both the top and bottom lines. It impacts the location, patient flow and staffing requirements for the office.

We recently discovered an opportunity for a practice to move less than a mile away to capture rent savings of $2,000 per month. The short geographical move yielded substantial long-term benefits. The physicians could maintain current staff and reduce overhead in addition to enjoying the new digs.

It helps to think of a medical practice’s month-to-month decision making as an internal competition for cash. As they examine the business model to adjust to the changes in healthcare, the principals have to consider the best allocation of available funds. Will it be for new equipment or another provider or staff member? Could it be for an additional office in another location that offers the desired patient demographics? Interwoven with the decision on how cash will be dispersed is the measurement of the return on investment. The proverbial “Cash is King” mantra rings true as ever for medical practices.

One key tactical maneuver has been to take the practice off campus to a medical office building offering lower occupancy costs. Baby Boomers want their off-campus facilities to cover all the services available in one facility, just like the retail center they grew up with. In the example above, the practice had nine months remaining on its current lease term. We found an opportunity that was much better for the business’ bottom line, and current patients only had to make one additional turn to get to the new location.

Reduced costs are just one part of strategic leasing. When planning to keep your practice on the road to success, think triple A: Access, Agility and Assets. Strategic leasing can allow the practice to better reach its desired patient demographics, while providing the ability to react to the aforementioned major market forces. The biggest asset is the business itself, so making a move that boosts its availability, versatility and bottom line makes plenty of sense.

Securing the most favorable occupancy costs through strategic leasing allows doctors to focus on their patients, people and, of course, the pursuit of business value.

— Leo Griffin is vice president of Healthcare Real Estate Services at Atlanta-based Bull Realty.

www.tampamedicaloffices.com

Understanding the Full Service Lease is Just One Piece of the Commercial Real Estate Puzzle

August 28, 2013 By Propertymetrics Understanding a full service lease in commercial real estate is easy when you have the right information. Commercial real estate professionals understand the ins and outs of this type of lease on commercial property. However, a full service lease is one of the commercial real estate terms that often confuses the general public. Here, you will find full service lease information and how this type of lease compares to other commercial real estate leases.

We’ll start with a simple definition of a full service lease. But first, it’s important to note that the term “full service lease” isn’t clearly defined and standardized. As with any legal agreement, it’s crucial that you actually read the lease terms and calculate a total cost of occupancy, which is rarely provided by the landlord. On its simplest terms, a full service lease typically refers to a leasing agreement in which the owner (lessor) is responsible for covering the building’s operating expenses in the rent. Those expenses that are covered in the rent can include – but are not limited to – real property taxes, insurance, utilities, maintenance, etc. So, to be clear, the full service rate of this commercial property lease covers building operating costs in the rent.

To someone renting commercial space, this sounds like a great deal. You pay a monthly rent based on square footage, and the building’s owner pays the operating expenses for the building. However, when it comes to full service leases, there are more terms involved than just paying a set rate. If you were to negotiate a deal to pay a quoted rental rate that did not change throughout the term of your lease, then you would most likely be negotiating what’s often called a gross lease and not a full service lease.

Here’s the big difference – one which all potential tenants must understand. The terms of a full service lease usually require the tenant to be monetarily responsible for any increases in the owner’s building operating expenses beyond the base year of the lease. What is the base year?

In most cases, the base year references the first calendar year of your lease. For example, during the first year of your full service lease, the owner of the commercial building pays $15 per square foot for operating expenses. Now, as you begin the second year of your lease term, the owner sees his building operating expenses increase to $18 per square foot. In this scenario, you would see your full service lease rate increase to cover that additional cost.

As you can see from the previous example, it is not just important that tenants have in writing exactly what operating expenses are being covered by the owner of the building. It is also extremely important to understand how those operating costs have risen each year in the past. While you can not predict the exact cost of increases in expenses like insurance, property taxes, or utilities; a tenant can review the trends in those increases to have a general idea how much their full service lease will increase year to year.

Now let’s take a quick look at some other commercial leases. We’re not going to explain in detail all of the types of commercial real estate leases available. However, it is good for you as a business owner and potential tenant to know the major differences between these leases. Below are a few more lease terms you may run across while researching commercial space to lease.

We mentioned gross lease earlier. There are also modified gross leases. These leases are similar in regard to a full service lease because the owner usually covers some operating expenses. It is unlike a full service lease because you usually pay a set rent throughout the term of the lease along with paying agreed upon expenses as well (i.e. tenant may be responsible for utilities.)

Another popular lease for commercial property is a triple-net lease. These are also referred to as NNN leases. What’s the difference between triple-net and full service leases? Simply put, a NNN lease normally requires the tenant to cover all building operating costs in addition to the agreed upon rent.

Finally, there are occasions where you may see a full service plus lease. You can probably guess exactly what this lease entails. When you sign a full service plus lease, you are agreeing to let the owner exclude a specific operating expense(s) from the rent. An example is that you may agree to cover utilities while the owner covers all other operating expenses for the building.

As you can see from the different commercial real estate lease structures, it is very important to understand what terms you agreeing to when you sign the dotted line. You might think that signing a $0.75 per square foot NNN lease is a great deal when compared to a $1.35 square foot full service lease. And, in fact, it could be a great deal. However, now you know that you can not make that call until you understand how much the annual operating costs are and how much they increase each year. When comparing alternative lease options, it’s critically important that you understand the total cost of occupancy for each lease. If you’re working with a good leasing broker, these calculations will be calculated and presented to you.

Full service leases are just one piece of the puzzle when it comes to commercial real estate leases. And yes, educating yourself on the terms and differences in leases is important. However, before you make any decisions and sign any lease for commercial space, we recommend that you have representation from a commercial real estate broker to ensure you are fully informed on the type of deal you are signing.

www.ItsTheLeaseWeCanDo.com

Tampa Mayor Bob Buckhorn and Sanford Mahr

TMC-The Mahr Company’s Sanford Mahr with Tampa Mayor Bob Buckhorn at Mayor’s breakfast at The University Club this morning. Fabulous overview of many exciting developments for Tampa by Mayor Buckhorn. Please ask us how we can be of service to help position you and your company for what is being planned.