The proliferation of Big Data technology is beginning to drive decision making for commercial real estate brokers and their office tenant clients. These broker tools are able to easily collect, sort and compare inputs, then accurately project performance, which provides office users with valuable insights for their decisions.
One of the most innovative applications to debut is the proprietary Office Lease Analysis Tool Set that Jameson Commercial Real Estate is deploying to its office broker team. This lease analysis is recognized as the industry standard for analyzing, comparing and reporting lease proposals. It combines the power of Big Data with powerful financial modeling algorithms that are proving to be a game changer for commercial office lease tenants.
The data output provided by this tool is uniquely comprehensive, with several pages of detailed items to pick from. Just some of the key metrics to sort, analyze, track and report include:
- Internal rate of return (IRR)
- Breakeven dates
- Property analysis
- Property summary reports
- Underwriting reports-proposals
- Proposal details
- Rent sensitivity analysis
- Assessment history
- Auto lease comps lists
- Peer property comparison
- Cash flow totals and year one
- Net present value of all lease costs
The lease analysis allows Jameson brokers to create a side-by-side comparison of up to eight potential leases simultaneously, manage, track and share lease versions continuously, and apply Big Data insights to create cash flow modeling, analyze key metrics, view graphic charts and more.
This can be used for comparing individual new space options by square footage, but also more generalized comparison data to evaluate building-to-building for potential renegotiations.
“From 35 years ago, as a commercial broker for office tenant representation, this is the most powerful technology tool I’ve ever seen,” said Bruce Fogelson, an Office Tenant-Rep Broker at Jameson Commercial. “It provides a valuable opportunity to evaluate my clients’ leases and buildings side-by-side with other comparable and provide a comprehensive analysis.”
“Obviously, this is an almost unfair advantage when my clients are making decisions about negotiating contracts and/or choosing properties,” added Fogelson. “But even if it’s not yet time to consider adjusting or ending an agreement, this provides endless value as a data tool and I make it free at any stage of a tenant’s lease.”
Sophisticated cash flow analysis can be simplified by the algorithms, so users can fully understand their options and make smart decisions, quickly and with confidence. Some examples of how commercial tenant brokers are using Jameson’s analysis include:
- Comparing multiple spaces with different lease terms quickly and easily
- Handling space expansions, contractions and subleases more efficiently
- Sharing lease proposals and tracking different versions
“There’s nothing to compare with a broker’s market experience and knowledge, but this system plugs into the general market data resource, or commercial MLS. It lets us see the market and narrow down the choices quickly. ‘What if?’ scenarios used to be complex and time-consuming, and they weren’t always easy to compare,” said Fogelson. “Now when a tenant client comes to me with questions, we can have answers ready for them. It’s saving them time and resources and delivering incredible visibility into all aspects of the market.”
Finally, current events can make the commercial market complex to sublease. With a tool like this, and with the right broker, tenants can take advantage of knowing key metrics and have the power to sublease with an understanding of the relevant economics and alternatives, just like a landlord does.
About Bruce Fogelson
Bruce Fogelson is an Associate Broker at Jameson Commercial. Bruce has been serving commercial tenants and landlords in the greater Chicago area since 1983 and has market leading experience in the full range of commercial real estate services as an office leasing broker. Fogelson’s 25+ years as an owner, manager, general contractor and 14 time award winning real estate developer who has 4 US Patents in standards and extras selections makes him knowledgeable from many sides of a negotiation, including both consultation and transactions. For questions, please contact Bruce at (773) 716-6686 or [email protected] or BruceFogelson.com
A DOZEN MORE THINGS TO THINK ABOUT!
- Take careful note of the components of the the CAM ( Common Area Maintenance) charges. Certain components of these need not be included in your monthly charges.
- Ensure that various options for future delivery from ownership contain mediation or arbitration provisions. Consult a competent Real Estate attorney.
- Obtain a clear and precise understanding of which party is responsible for what costs regarding any part of the HVAC and water heating systems. Ownership usually depreciates these items and are a capital asset.
- Review and understand explicit exclusions and prohibitions in your lease. Ensure that your daily business operations comply.
- If you hear the words “trust me” from the owner’s agent or the owner himself, smile and practice politely saying “Would you please put that in writing” as an automatic and rapid response. This is best practiced 3 times in front of a mirror.
- Engage competent legal advisors who have a practice focus on tenant representation to review your lease. Inquire of your prospective legal advisor what percentage of her business is ownership representation. A very high percentage could influence your advisors viewpoint.
- If you intend to spend significant sums for your commercial space build out, secure legal advice on your protections from mortgage holder foreclosure and early lease termination. A good tenant representative will help determine neighborhood trends.
- Seek lease provisions that allow you to fix a building problem if ownership is not responsive. These costs should be deductible against rent.
- Ensure that your business insurance is in compliance with all relevant lease clauses lest you be found in default of one of those provisions.
- Verify actual square footage with that used in the lease for cost allocations. Discrepancies are very common and unnecessarily costly.
- Consider engaging a professional tenant representative. He will save you time. There is no magic to the leasing process. It is just time and expertise intensive.
- Begin looking for your space no later than 8 months ahead of your intended occupancy. If you do not have enough time to evaluate and calmly choose, your results can suffer.
Jameson Commercial has been an integral member of the Chicagoland real estate community for more than 28 years. With billions in transactions, the company holds proven expertise which its professionals apply to all types of transactions, from purchases to sales to leases. Jameson Commercial is a full-service commercial real estate firm with specialists in multi-family, retail, office and industrial real estate. For more information, visit jamesoncommercial.com and reach [email protected] or call (773) 716-6686.
DISCLAIMER: The brokers at Jameson Commercial and Bruce Fogelson do not practice law. This article is intended for informational use only and does not assert a legal position, nor does it constitute legal advice. Each case varies and information is subject to availability