Forensic Lease Audit

If your business leases commercial space, does your additional rent billed seem abnormally high? Is the source befuddling you?; a Forensic Lease Audit can identify the source. A Forensic Lease Audit is a complete review of your lease language with related billing. The goal is to verify the accuracy of rent billed to your business by your landlord. The auditor becomes your advocate to identify the correct amount of overcharges billed by your landlord, to be reimbursed to your business or credited to your rent account; future billing normalizes to match your CFO’s rent expectations. The categories listed below are often a source of overcharged additional rent:

  • Building Maintenance costs
  • Capital expenditures passed along as ordinary repairs and maintenance
  • Costs non-compliant with lease terms
  • Double billing of costs
  • Overstated gross–up calculations

Leases often have a short window of time to audit rent invoiced to dispute the charges. Lease clause language and their actual application to the billing of escalation charges (eg. Operating Expense Costs, CPI, and Porter Wage) are quite unique. Savvy financial advocacy can get overcharged additional rent found from a Forensic Lease Audit reimbursed or credited to your rent account and normalize future rent billing. The Forensic Lease Audit is a niche financial service that differs from the services offered by accountants or attorneys.

If your rent bills are abnormally high, we recommend contacting The Lease Audit & Review Co. directly.  They have extensive expertise in escalation lease interpretations and their compliance.   They’ve helped many commercial Tenants over 30 years to recover overcharged additional rent. Reach The Lease Audit & Review Co. at theleaseaudit.com or reach Tom Woodward, Principal at tkw@theleaseaudit.com, 201.264.5265.

If renewal or relocation is warranted to lower your real estate costs, BREG collaborates with The Lease Audit & Review Co. to ensure the language in your new lease guides the Landlord to prepare rent bills fairly. If you’d like to discuss BREG’s Tenant Rep services, please click “Request A Consultation” link in the upper right of the screen. Enter “Help Lower My Rent Bills” in the subject line; please include your name, email address and telephone number in the message body; I reply within 24 hours. Thanks for reading and listening. ###

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Too Much Space? Sublet, Divest or Move

Has your sales or business operations changed to need less commercial space than you signed [a lease] for? Is your rent bill using too much of your operating budget? If you face this problem, a prompt strategic approach to solving it is necessary. Look at the financial impact and legal exposure of your options. I explain below how to approach this dilemma, how to solve it and free up your operating budget.

Assess the problem. What’s causing your business to use less space than you signed for? Were signs of change let go when you signed the lease, or is this a new emerging trend likely to stick? If a percentage of staff will be let go, how would you re-seat the staff kept to free up space to divest? Is additional rent more than you expected (and planned for)?

How many years are left on your lease? If less than 4 years and space is in move-in condition, the space could be relet for a longer term at current market rate, ending your lease.

What are your space and location alternatives? Finding the right building, in the right location for your business can be challenging. The scope of Tenant Improvements to the new space will dictate the base rent and lease term. What lease term can your business accept with some uncertainty of its future? (Note: Keep the math difference in mind that less construction cost equals fewer lease years, more construction cost equals more lease years (until rent exceeds construction cost)).

Compare Lease Terms of Buildings. Key clauses to review are operating pass thru’s, expense stops and operating increases. Paying the difference between year to year operating expenses is best; paying increases over a base year gets expensive to your operating budget.

Transaction model. The most effective way to compare deals is to prepare transaction models. (Your Tenant Rep broker has software to do this.) Modeling shows the financial difference between deals, some of which may look alike in the offer.

Personal Guaranty and Good Guy clause. If there’s a default of rent payments, the person guaranteeing the lease is responsible to pay. Good Guy clause versions are a) keep the rent paid through the lease term or b) leave the space broom clean, pay all rent due through the last due date, return the keys to be legally released from further lease obligations. Work to secure (b) because it releases you from rent you will not/can not pay and gives the Landlord back a space to relet without paying to evict you.

Sublet terms. What legal rights does your Landlord have to list your space for sublet? The time frame to list affects how quickly you can dispose of the unneeded space. Remember the leasing commission [and any construction costs] you’ll pay to sublet.

Delivery of Space and Move. Sublet of the vacant space or moving should be done during the least intrusive time of your business year. Expect to take 45 days to plan the move and another 30 days to execute/close it. That time needs to be compatible with your subtenant or your new Landlord.

Sublet. Sharing up to 3,000rsf of unused space is a quick solution; costs are limited to a background check, a credit check and fees to Landlord. If you’ll be compatible sharing the common areas of the space, pursue a space share.

If you must separate the vacancy from your space, expect to pay an architect and construction costs. Only choose that option if costs are dramatically less than your potential moving costs, future additional rent and escalated rent you’ll collect from the subtenant. Always review at least the two most recent years of signed financial statements from the Subenant and talk to 2-3 creditors to ensure they can afford to pay you their rent.

Divest. Sometimes, there’s a market for your vacant space to the Landlord, either in whole or as part of an adjacent space. However the market exists, hire a Tenant Rep broker and Tenant Rep attorney for a consulting fee to ensure your lease is amended with less space to bill for with your interests in mind.

I trust this post has been a simple read for you and helpful if you’re faced with this issue. I’ve helped companies deal with this issue in the past. If BREG can help you, please click “Request A Consultation” link in the upper right of the screen. Enter “Sublet, Divest or Move” in the subject line; please include your name, email address and telephone number in the message body; I reply within 24 hours. Thanks for reading and listening. ###

NYC Office Buildings Reposition

This is an excellent perspective how select Manhattan office buildings are repositioning themselves to match the needs of millennial tenants.  The article is found at this link.  (Note: the author is my co-worker). http://nyrej.com/75161

Lease or Buy

The space your business operates from represents an investment of available cash to bring a product or service to market to generate a return on investment. I have preached for many years that real estate is a tool to operate a business. This tool must be flexible in use and marketable to relet or sell when its no longer useful to your business. Space size and price do not offer enough of a means to compare options to choose from. Factors to consider include physical space, price, acquisition costs, holding costs/benefits, tax effect, return on investment. Merely looking for space within a budget leaves you vulnerable to taking ill-fitted space that you’ll live to regret using. A savvy Tenant Rep will show you the qualitative and quantitative modeling of how to look at your space options to decide which deal meets your operating needs. Such modeling has worked well for my clients since the late 1990’s.

Lease, Renew or Relet

You can choose to move to lease, exercise an option to renew or to relet space within your building at new terms. Critical questions to ask are space amount, engineering of use, layout, construction and space equipment costs, moving costs, budget and cost of capital, tax effect, flexibility of use (sublets/assigns, expansion or contraction rights). Each space considered should be presented in column format to facilitate a decision of accept, fine tune terms or drop the space from consideration. This format also enables preparing fighting alternatives to secure the deal you need. Overall, this method of comparison uncovers fine points of options to root out the right one for you. Give your business enough time to conduct this search and analyze project at a leisurely pace, relative to market conditions. Signing the term sheet of the deal testifies that the choice made from the search process is to move, exercise an option to renew or draft a new lease for your space met the operating needs of your business with a predictable outcome.

Purchase. Purchasing calls for placing available cash for acquisition costs, construction and property management, mortgage and property taxes; all other costs being equal if leasing. Analysis performed by your Tenant Rep shows how your investment will perform as compared to placing the money in other investments and how the real estate adds value to the business. If you’ll lease the unused portion of the property, the Tenant Rep prepares a financial model about how the net profit from Tenant(s) would be invested to enhance investment yield. A financial model for purchasing space shows how your cash will work for you plus net proceeds of sale, projected over a holding period.

Sale-Leaseback. If you own your property and are considering to unlock its cash value from a sale-leaseback, a financial model will show the present value of the property, the interest rate to pay rent, any operating costs, how investor’s holding period may affect your rent responsibilities. Tax impact influences your consideration to complete a sale-leaseback transaction.

Comparing to lease, buy or sale-leaseback shows your cash outlays, productivity of staff from space design and location, and shows tax impact.

If a change of the real estate for your business is on your horizon of projects, I encourage you to contact me to talk it out. Please click “Request A Consultation” link in the upper right of the screen. Enter “Real Estate on My Horizon” in the subject line; please include your name, email address and telephone number in the message body; I reply within 24 hours. Thanks for reading and listening.

Buy Property

CONSIDERING TO BUY A PROPERTY vs. LEASE FOR YOUR BUSINESS? If you’re considering to own the space your business operates from, have you identified how financial benefits can lower your cost of occupancy? Imagine the lift to your P&L… Financial planning is as important as preparing the building for use. The goal is keeping space costs known, predictable and low while adding property value to the value of your business.

The physical and financial aspects of the buy can be plugged into transaction software that changes with scenario models. A comparative quantitative analysis helps to reveal your cost of occupancy. The final transaction model will serve as a guide to negotiate the closing terms of the buy as well as drive the project management of the build.

I’ll show you how a mortgage, tax, utility and economic development benefits will help lower your acquisition, development and operating costs of the property. We’ll review each scenario to the extent you need to create options to focus on. Our review of options will include how we’ll respond if the seller (and other players) cannot meet your transaction or development needs.

Five (5) Key Factors affect a property purchase:

  1. Physical building and location. What kind of building and layout does your business need? Where should it be located?
  2. Development. Does the building need retrofitting, rehab or is land development your best option?
  3. Financing (including IDA financing). Your credit status will dictate the lending terms you can secure.
  4. Economic Development benefits from utilities, job creation, construction. Location of the business, employees relocated, new hires and how you power/light your property will all help identify the economic development benefits available to you to lower your cost of occupancy.
  5. Tax benefits (mortgage interest, depreciation, property tax abatements, effective tax rate). Property tax abatements, plus tax deductions for interest will be factored into the transaction to show its financial effects on your cost of occupancy.

Considering to buy a property requires quantitative and qualitative analysis. I discuss the report with you in layman’s terms to make a choice giving a predictable outcome. The financial and physical outcome of acquiring commercial real estate requires some degree of predictability to focus on operating and improving the performance of your business. This consulting service is available for an hourly fee or is included in the commission fee [I’m paid by the seller of the property].

If you agree that this analysis service would be useful to you, please click “Request A Consultation” link in the upper right of the screen. Enter “Acquisition Modeling” in the subject line; please include your name, email address and telephone number in the message body; I reply within 24 hours. Thanks for reading and listening. ###

NYC Showroom Listing: 5th/35th Fashion Sublet

 NYC Showroom Sublet5th/35th Newly built / furnished, ready-to-wear, fashion showroom for accessories, no hat sales please. Top-pick accessories bldg. Unique/high-end finish, white, brightly lit, display shelves, voip phones, music, gross rent. 610 rsf ($2796/mo.) divisible to 215 rsf ($1075/month). Executive suite style recep and desk space for additional fee. Click request a consultation in right of screen, post “NYC Showroom for Sublet” in subject line,include your contact information; I reply within 24 hours.###.

Did You Plan for No?

In the midst of negotiating your deal for space with key stakeholders’ talking to secure their position in the deal, have you planned for them to say “No” to your critical/important needs or worse, act out to meet their needs?? Finding these issues out now could derail/end your deal unexpectedly; that’s to be avoided.  Most stakeholders of a deal don’t prepare for such contingencies…yet such preparation is essential to close the deal. Making compromises (that may include agreeing to split the difference) in the midst of negotiating can harm or eliminate meeting critical/important needs. Negotiating is a conversational debate among stakeholders to meet their needs of doing a deal. Maintaining positive relations is key to stakeholders agreeing that a deal is worth doing.

Naturally, any negotiation will factor in time to compensate for general disagreements, even some issues may need tuning or re-engineering to realize interests. However, no interests should be compromised or deal terms’ forced to re-trade that harms anyone’s critical/important interests.

While negotiations are being planned, consider the risks that key stakeholders may say no to your critical and important needs. What would your options be to meet your needs AND stakeholders to meet their needs? (Consider these steps akin to your attorney preparing you for trial.) Here are brief recommendations to assess risks before all stakeholders talk to negotiate.


i) Identify the key stakeholders.
ii) What’s important to them (you included)?
iii) Brainstorm what they or you may do if neither gets what’s important to them.
iv) How likely are options in brainstorming likely to occur?
v) How do unilateral actions affect stakeholders?
vi) How do unilateral actions affect you?
vii) As you perform the preparatory process, has it inferred that you forgot to identify/address any issues/interests you were planning to negotiate for? If so, return to analyze/fix what’s missing, then walk through all steps, including this one, to ready yourself to negotiate. If you or stakeholders do not meet your needs, an option should be to drop the deal.

Now you’re ready to negotiate that includes talking out options if your /their needs are not met. The outcome is a positive choice for all stakeholders involved. My negotiating practices have used this method successfully for 10 years. If I can be of help to you securing your next piece of commercial space, please click “Request A Consultation” at the right of the screen, write “Planning For No ” in the subject line; add your comments, name, email address and direct dial number to reach you; I reply within 24 hours.) Thanks for reading. ###

Deal Get What You Need?

Before you sign a lease or contract for new space for your business, do the negotiated terms get what you need? Just because the deal is market competitive (and perhaps a good one), is that deal good for your business? Don’t sell yourself on a deal that didn’t get what you should have. (The deals to my past customers were always good for their needs and at market competitive terms.)

Brokers’ efforts are often driven by their need to generate commissions to feed the overhead of their business. Landlords make deals to realize property returns on investment and feed overhead cost s of building operations. Clients and Tenants respectively often give up too much to secure space they need.


How can your broker secure the terms your business needs to operate with? They learn about the issues important to you, what your interests and positions are of those issues, identify creative ways to secure your needs with the landlord or seller, and educate you of the risks of picking the wrong deal or property you ask them to secure. (Note: Savvy realtors have staggered payouts coming to them regularly, affording them the ability to engineer deals that are right for their clients and market competitive.

I suggest taking 2yrs to secure the space you want for every 7500rsf of office space and 15Ksf of industrial you need. The conversation begins to identify who the stakeholders will be for the move, a consensus of important issues among stakeholders, what the interests are among those issues, what interests are critical, important or tradeable. Your broker’s job is to identify creative options of how your interests will be secured, solving your issues, how to get the seller’s issues secured and how the agent will be paid to represent you. There’s a methodical process to prepare for negotiation and a methodical way to negotiate that keeps all stakeholders happy with each other.

The 2yrs lead time gives your broker the ability to find the best options for you to consider, secure the deal that’s best for you and is market competitive. The next time you begin to think about a need for commercial space, hold a holistic view of your assumptions and begin to create objectives. From that you will be ready to meet a savvy commercial realtor to help you identify and secure the terms worth signing for. I have worked this way for 10+ years. If I can be of help to you, please click “Request A Consultation” at the right of the screen, write “Interest-Based Negotiation ” in the subject line; add your comments, name, email address and direct dial number to reach you; I reply within 24 hours.) ###

Tenant Rep – Project Manager

Is your Tenant Rep steering your space change(s) to reach its objectives, keeping to schedule and budget?  Changes to commercial space is Project Management.  A structured, proactive approach to project management could assure the project realizes its objectives, perhaps ahead of schedule and under-budget.

 –

Tenant Rep services are about meeting client needs plus project management, similar to a corporate real estate director.   Meeting the objectives of change requires a seasoned project team with project leader.   Having managed many change events, I offer a comprehensive perspective to assess, plan and monitor a seasoned team to manage a project. My services include:

  • Agreement on objectives between us;
  • Scope of Work that gets you the deliverable you expect;
  • A cogent plan, subject to field conditions, to deliver the Scope of Work;
  • Competent project team and project manager to execute the plan;
  • Astute, timely, monitoring the project to keep scope, schedule and budget on track;
  • Brief yet detailed recap that project objectives were met, comforting you to accept the deliverable received, agreeing to close the project.

If your Tenant Rep is not giving you these services, ask why; once you experience structured project management you’ll ask yourself why you waited to.  See my education and experience at LinkedIn to understand how I can serve dual roles as your Tenant Rep and Project Leader, from initial conversation to post project support.  If you have an initiative you’d like to discuss or would like some free advice, click “Request A Consultation” link, fill out the form and send; I reply within 24 hours to learn about your specific real estate needs. Thanks for reading. ###.

Business Analysis = > Tenant Rep

Corp Advisor(Post updated 01/26/2019) If your COO thinks its time to change the space your business uses, a great deal, in a seemingly good space, could become a (operating and financial) debacle you’ll seethe from long-term. (i.e. bad layout, a long inflexible lease, construction cost/time overruns, poor construction finishes, unexpected extra fees in the monthly rent bill). Blah, blah, blah you say? I’ve seen it happen many times; some clients were referred to me to solve such problems with their space.

A space debacle is avoided through planning – AND – using time to your advantage. When neither of these two elements are used, you pick the short straw and overpay. Analyzing your business carefully, to identify its needs [from workflow] and resources, become the baseline to negotiate the deal that meets the operating needs of your company.

Basic “Business Analysis” questions to ask:

  • How is the business operating today from its space?
  • Does the space facilitate productive workflow for ALL your staff (from baseline workers to C-level executives)? Is the work environment functionally collaborative and comfortable?
  • Does the space layout, location and rent bill foster productivity and profitability?
  • Can your space size change as your business does?
  • Does your office furniture, equipment and phones foster your comfort, efficiency and work pace?
  • Does your lease (or sublease) protect your occupancy rights? (this is more a business term that legal advocacy guides you to secure).

These questions are basic yet with privately held businesses, I’ve often seen little thought, planning and execution done in 24+yrs as commercial Tenant Rep. The best plan to change your space is a flexible one that’s able to make reasonable compromises as they arise. Identifying why your business is failing to meet executive vision, with worker comfort, leads to a baseline of expectations for new space. Let your Tenant Rep interview executive management, mid-management plus a few line workers; the data gathered will lead to an understanding of information flow, what defines a) a comfortable, efficient working environment, b) flexible occupancy, c) a flexible lease, d) sufficient utilities to meet operating needs.

If your business occupies 7Ksf [or more] of space, budget at least 2 years prior to occupancy to address your change vision at a leisurely pace; that puts time to your advantage to secure the right deal for your business (vs. a good deal for the landlord).  A virtual test-fit (1) of your space helps to create a short list of spaces/properties to focus on.

If you agree these suggestions are sensible for you, request a free 45 minute consultation with me by clicking the link at the right. Please put in the subject line “Business Analysis meets Real Estate.”; I reply within 24 hours. We hold a substantive face to face conversation, and see if our personalities are compatible to work with each other. Thanks for reading, perhaps I’ll hear from you soon. ###

  1. Kirsch, B. (2016). The value captured through a faster tenant test-fitting process, REFM, 03/15/2016.