Archives: Berger Bites

A commercial property manager provides a multitude of services, everything from providing a budget for the property, to maintaining a property, to being the liaison between the tenants and the landlord, also overseeing the maintenance and services provided to a property.

Any payment made to a landlord in the state of Florida is considered income, and when a payment is made to the landlord and that’s considered income the landlord has to pay sales tax to the state of Florida. That sales tax is passed through to the tenant. That changes by state, and that’s actually a Florida-specific law.

In a lease situation, it is typically the landlord who pays that and that is agreed upon in the lease upfront. What you try to do is get an understanding in writing, a schedule on the back of a lease that says what following tenant improvements will be performed by landlord at their sole cost. Usually those renovation costs are born by the landlord and are incorporated into the eventual lease and lease rate.

Berger Commercial provides sophisticated third party commercial real estate services for office, retail, industrial, and investment properties. We specialize in both tenant and landlord representation as well as receivership services.

It’s typically a single tenant triple net lease, which means there’s very limited responsibilities of the landlord. If anything, maybe the landlord is going to take care of the roof and the structure, and the tenant pays everything else. Essentially, it’s like handing over the keys to the property to the particular tenant. Typically, the leases are 10 to 20 years with options. The tenants that go in are usually banks, fast food restaurants, retail chains, sometimes land leases. It’s a very conservative type of investment, very hands off for the owner to have as an investment.

Berger Commercial Realty services Dade, Broward and Palm Beach Counties. Although we are south Florida focused, we do handle properties throughout the state of Florida.

Usable square feet is a specific area that the tenant occupies in order to run its business. The rentable square feet means usable square feet plus their pro-rata share of the common area. Common areas are hallways, stairwells, elevators, bathrooms, and meeting rooms.

$10 per square foot would be the annual rental rate for the space in question. What you would do you would take the size of the space, multiply it by the $10 per square foot, divide that by 12 and you’ll have your monthly rent.

First of all, I’d like to start out with an honest assessment of the property. What’s the value of the property? What’s the positive and negatives? Who are the likely buyers or the likely tenants to go into that building? From there, I like to create a custom marketing plan for each property. I use the funnel approach. The final approach is, how do I get the most number of eyeballs on that piece of property? Is it a broker type thing, where you have to blast it out to a number of brokers? Is it a user building? Is it somebody in the very same neighborhood where this property is? What does that funnel look like, and how do you fill it, to get to that property?

From there, obviously, we use a number of Internet-based tools. CoStar, LoopNet, et cetera. We also have our TCN network. These days, we obviously put signs and custom marketing packages together, but the days of just being able to slap a sign on the property and expect the phone to ring are over. You have to go after those specifically targeted tenants on a regular basis. That’s the best way and most proven technique that I’ve found over the years in the business.

Select space is a term commonly used to describe industrial space. It’s comprised of unconditioned warehouse space, and an office or showroom that is typically more than 10% of the entire space.

Well I’ve actually worked for both, and I think it boils down to two reasons. First of all, it’s a local business. You have to have a local broker who knows the market, knows the market conditions, knows the landlords, and tenants, knows the owners, and occuipiers, you need to know who … What the latest information is on a per market basis, and you don’t find that in a national firm. In addition, it’s an individual basis, it’s an individual you’re betting on that horse. Who is the best broker that can handle that, what is his track record, what’s his deal flow, what kind of transactions has he done in that particular sub-market. You’re going want to know all of those things. At Berger we’re a little bit of a hybrid. What we have is we have a strong local brokerage, with local knowledge, but we also have national footprint through our affiliation with TCN, which also just went international. Some properties do require some international exposure, depends on the type of property, but for the most, the business is local.

An industrial property is a wide range. It can be anything from flex space, which would be a portion in a portion warehouse to heavy industrial, which would be manufacturing, such as a large factory.

A percentage rent is negotiated at the time of the lease. What it does is the tenant reports their sales every month to the landlord, once a certain base amount is reached, then the landlord then gets a percentage of the rest of the sales over and above that base amount. It actually works as an incentive to both the landlord in driving more tenants to the property and maintaining the property, and it helps the tenant by perhaps negotiating a lower base rent amount for them to get into the property.

The rentable square feet is the actual space that the tenant pays rent on and what it is it’s made up of the actual usable space, which is the envelope of space that the tenant occupies, plus their pro-rata share of the common areas, the bathrooms, the corridors, the common lobby down the stairs. The way the rentable square footage is calculated is you take the usable space and you multiply it by a percentage, which is known as either add on factor or load factor and a lot of times, depending on the building, it could be anywhere from 15 to 30%. In most buildings, tenants like to have it more efficient, which would be a lower percentage. They don’t want large lobbies that they don’t have really any use for, but they’re paying for. The more efficient a building is, obviously, the lower the percentage and the more bang for the buck the tenant gets.

Typically, the landlord pays for tenant improvements as part of the negotiation of a lease. At times, the rate of a lease or perhaps free rent is given in lieu of paying for the tenant improvements.

Hold over rent is when a tenant stays in their space after their lease expiration date. The landlord charges a premium for the tenant to stay in that space not being on a lease and it also hinders the landlord from making any plans on that space. That’s why there’s the upcharge for staying in hold-over.

A Phase 2 environmental site assessment is performed when the Phase 1 identifies recognized environmental conditions and/or recommends further investigation.

The difference between ceiling height and clear ceiling height is that the ceiling high as measured from the floor to the underside of the roof, and clear ceiling height is measured from the floor to the underside of the lowest hanging object on the ceiling, whether that be a light or a sprinkler or a beam.

During the due diligence and inspection period, I would highly recommend performing a property condition report, environmental assessment, physical inspections, investigating the zoning and allowable uses of the property, land and improvement surveys, analyze lease documents and perhaps various physical inspections such as roof, mechanical, electrical and plumbing inspections.

Vanilla box is a term used to describe a space with a cement floor, ready-to-paint walls, working electrical outlets, lighting, plumbing, finished ceiling, heating, and air conditioning. What it doesn’t include is internal partitions.