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ROCK Commercial Real Estate, LLC |
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News > Newsletter
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ROCK Commercial Real Estate Newsletter Industrial Issue - April 2009FeatureArticle The Flexibility of the Lease By Jason. Turnbull
A lease provides flexibility, and with the preservation of working capital as important as ever, leasing commercial real estate can be the correct decision for a business. It is generally agreed that leasing has many advantages for a tenant. Some of those advantages are as follows: · Cash outlays are less for a lease than a purchase, which would preserve the liquidity of working capital. Ø A year ago, 20% equity position to obtain a commercial mortgage was customary; today 25% equity position may be required. The cash outlays for a lease are usually much less and may only require an initial payment of the first month’s rent and security deposit. · Tenants can negotiate a desired lease duration, which can create flexibility and mobility if options to renew or expand are allotted to the tenant. Ø Option to renew grants tenants the ability to extend their lease for a specific period of time and at a specific rental rate after the initial term of their lease. Option to renew creates a more flexible lease for the tenant, because the tenant knows it can remain in the premises if needed, but also can elect not to exercise his/her option, which would allow the tenant to relocate, if required. Ø Expansion options provide the tenant flexibility for growth over the course of the lease. The tenant can negotiate that his/her lease contains a First Right of Refusal. The First Right of Refusal is a tenant’s ongoing right to lease additional space within the building as it becomes available. Landlords will notify the tenant of available space within the building and the tenant can elect to exercise his/her First Right of Refusal and acquire the additional space if growth has occurred or is anticipated. · Landlords often allow periods of fixed rental payments for high-credit tenants that are willing to execute a long term lease. Fixed rental payments create cost control for tenants. Ø Landlords provide this concession because of a high level of protected income and reduced management costs. · Leasing is a form of off balance sheet financing and it may increase Tenant’s borrowing capacity for capital equipment and operating funds. Ø Tenant improvements can be financed by the Landlord and amortized over the term of the lease, rather than financing the improvements and capitalizing it on your balance sheet. Ø Full amount of rental payments are deductible for tax purposes. Leasing a property can be a complicated transaction filled with intricate details. In order to fully benefit from the advantages of leasing, adequate real estate representation, which includes a commercial real estate broker, attorney, accountant, architect, and engineer is necessary for a tenant to achieve his/her business objectives. I invite you to visit our web site at www.rockrealestate.net for information that may be useful in your planning, review the industrial vacancy report, or call an Advisor to analyze your particular situation and needs. Spotlight Industrial Property140 South Main Street - Manchester, PA
This light
industrial building is located in Manchester Borough in York County,
Pennsylvania.
Contact Ted or Jason directly for more details Gichner Systems Group, Inc. has leased 8,000 square feet of industrial space at 180 Orchard Street in York Township, Yoe, PA. Wagman Construction, Inc. sold the industrial property located at Farmtrail Road, Lot #12 in Manchester Township in York, PA to Tekgard Inc. The site consists of 1.09 acres. SightScapes, LLC. has leased 2,880 square feet of industrial space at 1880 West Mason Avenue in West Manchester Township in York, PA. Key Plastics Technology, LLC sold the industrial property located at 3350 Farmtrail Road in Manchester Township in York, PA to Tekgard, Inc. The site consists of 40,000 square foot on 4.04 acres. Sunrise Holdings LP sold the industrial property located at 1000 Roosevelt Avenue in York City in York, PA to Hartley Street Properties, LP. The site consists of 9,930 square foot former body shop on 0.32 acre. York Container Company leased 45,000 square feet of warehouse space at 2800 Concord Road in Springettsbury Township in York, PA.
ROCK Industrial Team
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