TENANT PERFORMS THE BUILD-OUT
It may be better to have the Landlord perform actual build-out work, so that
unexpected problems or delays will be the Landlord's cost. When it
is appropriate for the Tenant to perform the build-out, have the lease provide
for an extension if delays are encountered which are not the fault of the
Tenant, and extra Landlord monetary contribution if unexpected repairs are
required (termites, code violations, etc.).
NO LIMIT ON PERSONAL GUARANTY
Many times it is possible for the Personal Guaranty to expire "x" months after
lease commencement, or provide a specific dollar amount of guaranty. Although
not as beneficial, it may be possible to use an "Evergreen Guaranty" which
provides that Tenant will personally guaranty a set number of months or years,
commencing upon default by Tenant. Your professional will know what is typical
for your market.
LIMIT ON FUTURE FLEXIBILITY / COMPANY GROWTH
How fast is the company going to grow? Will it be necessary to downsize? How
likely is a new partner or merger? These situations, and more, indicate
the Tenant's need for as much flexibility as possible. Tenants should work with
experienced professionals to insert language into the lease which will allow a
cancellation or modification of the lease under certain circumstances.
LIMIT ON FUTURE FLEXIBILITY / PRODUCT GROWTH
Will the company want to carry a new product line or install a new technology?
Will a neighboring Tenant vacate (or move-in) which impacts the business?
Tenants should be cautious with their "Use Clause" since these clauses can be
very specific as to what goods and services the Tenant will provide, and may
prevent a Tenant from offering a very lucrative product or service in the
future which has not yet been invented!
CHOOSING THE WRONG LOCATION / TURNING MARKET
Tenants who do not know the local market may locate into a declining area,
making it impossible to hire and retain the highest quality employees.
CHOOSING THE WRONG LOCATION / PENNY WISE AND POUND
FOOLISH
Retail tenants who choose locations in un-anchored properties to obtain
lower rental rates. Traffic and subsequent sales volumes are dismal, and
tenants fight a losing battle.
HAMSTRUNG BY YESTERDAY'S TECHNOLOGY
The office building is not set up with the newest in
telecommunications and data cabling, such that Tenant cannot benefit from
today's technology. Business is lost to competitors which can offer better
service to clients.
TAKE TOO MUCH SPACE
Tenant did not use their own space planner and leased offices which were too
large or had an inefficient floor plan.
SPACE WAS MEASURED INCORRECTLY
Tenant did not verify the Landlord's dimensions and figures and paid rent on "phantom" space.
UNNECESSARY SECURITY DEPOSIT
Landlord asks for Security Deposit as standard procedure, but does not require
one depending upon Tenant creditworthiness and/or build-out requirements.
NARROW SEARCH
Tenant limits its geographic area of interest too severely, and does not
complete adequate market education resulting in lost opportunities.
HOLD-OVER PENALTY IS TOO HIGH
Standard hold-over penalties in first draft lease agreements are typically far
higher than necessary.
NOT REVIEWING THE LEASE OFTEN ENOUGH
Tenants miss notification dates, resulting in automatic renewals, loss of
option period, or other penalties.
POOR DESIGN Tenant made poor choices during interior design stage because of focus on "least initial cost" instead of "lifetime operating costs". Many times upgraded
lighting, windows, insulation, etc. can make very dramatic improvements in employee
productivity, operating costs, and business security. Your professional should
be able to discuss the latest in facility design, materials and technology.
POOR PLANNING Natural catastrophe
occurs and electric power is lost for an extended period of time. Tenant is out
of business, and loosing clients at a rapid rate. Proper planning and/or design
can eliminate potential business disasters.
(The previous list of common mistakes is the result of a
survey taken among members of the prestigious International Tenant
Representative Alliance. Participants drew from an average of well over 15
years of Tenant Representation experience, representing and advising national
and local commercial tenants with hundreds of leases totaling millions of
square feet. Most major U.S. markets were included)
Source:
Survey of the INTERNATIONAL TENANT REPRESENTATIVE
ALLIANCE
Compiled by Craig Melby, CCIM, SIOR Copyright
ITRA
Nothing contained herein is to be considered legal advice. Always seek legal advice when evaluating any legal document
