Charlotte NC Commercial - Blog by Rob Cassam

Lease Negotiations With A Corporate Team

Wed, 01 Jul 2026 10:45:00 -0400

Lease Negotiations With A Corporate Team

A few years ago, senior corporate managers were able to make major real estate decisions by themselves. Now, a negotiating team will negotiate leases. This team may consist of legal counsel, finance department representatives, outside specialists such as real estate brokers or tenant representatives, design and engineering consultants, and others.

In today’s market, corporate tenants with high credit ratings, who are willing to make long-term lease commitments negotiate from a strong position. Therefore, corporations that formerly treated real estate transactions in a casual way have now developed detailed real estate negotiating strategies. The corporate tenant sees these negotiations as a way to cut costs within the company (whether upsizing or downsizing).

Landlords, developers, and brokers must be aware of this new style of negotiation. While the real estate executive plays a key role in developing the strategy, the other parties must be ready to respond quickly to requests for information and be prepared to discuss issues that rarely if ever arose in the past.

Request For Proposal

The document that best illustrates the new negotiating process is the Request For Proposal (RFP), sent to property owners. The RFP incorporates the specification for rental rates, free rent, up fitting, operating expenses, options, cash incentives and other “money clauses” that the corporation intends to negotiate. A short list of prospective sites or buildings is then prepared based on the initial responses to the RFP. The corporate real estate executive (often with the aid of a real estate broker) will negotiate to obtain the best deal with the prospective landlords.

The RFP usually contains a number of items that are non-negotiable, for example, amount of usable square feet, geographic area, lease term, expansion option, parking facilities, and security. On the other hand, many items remain negotiable, such as rent rate, concessions, rent escalations, cash inducements, and amenities. The parties should understand from the outset that failure to obtain a non-negotiable term could kill the deal for the tenant. Other items may be “throwaways” that could be modified or omitted from the lease.

Example: A corporate tenant may lack the capital funds to improve the leased premises, and so may be willing to pay a higher rental rate or extend the lease term in exchange for a larger allowance for improvements. Alternatively, the tenant may be willing to fund all or part of the improvement costs in exchange for a lower rental.

Give & Take Negotiations

Although it is obvious that any negotiating process involves give and take by both sides, corporate real estate executives have learned the importance of understanding the strengths and weaknesses of their bargaining position as well as that of the landlord. Within reason, these tenants are assured of getting whatever is needed if the bargaining team is aware of the options and takes carefully calculated risks based on solid information.

Basic Strategies In Choosing Investment Properties

Wed, 01 Jul 2026 10:45:00 -0400

Basic Strategies In Choosing Investment Properties

No single property can fit all of the investment goals and rules an investor has set. Even if the investor tried to build a property to specifications, he would find some things “not quite right”. The investor is, therefore, wise to anticipate problems and have some basic strategies for dealing with them. Here are some suggestions to help the investor devise other approaches to meet special needs:

Energy saving potential is more important than style or appearance. Given increasing shortages of natural gas and rising prices of fuel, energy saving has become paramount for successful real estate investing.

Location is usually more important than the buildings on the lot. You can always make repairs and improvements to a building, but you can’t do anything to change the qualities of a location.
An older property is preferable to a new property if you want to be reasonably certain about income and cost potentials and are seeking the most rentable space for each investment dollar.
Good workmanship is preferable to good materials if you have to make a choice. Workmanship can overcome the defects of poor materials, but you would pay constantly for poor workmanship. Hopefully, you can avoid this kind of choice because poor workmanship and poor materials mean extra costs and continuing problems.
Low down payments are preferable because they increase the earning rates on your equity. However, be sure you have a financial reserve in case the property does not produce enough net income at times to pay for the financing.
Plain properties without distinctive architecture or other characteristics are the most durable investments. Luxuries or extras may make the property look better, but they do not improve the income potential.
In a given market, smaller units will usually be more saleable, easier to manage, and easier to keep rented in changing markets. Any apartment property with more than 20 units will require professional management.
Size of the property and units within the property should fit the average for the market. Smaller or larger units often present problems that result in lower prices and higher costs.
Use experts when in doubt. The costs of using appraisers, builders, lenders, and lawyers are considerably less than those associated with making mistakes. If your investment cannot produce enough income to let you pay for expert help, then it may be the wrong investment.
Convertibility. The property should lend itself to changes as the market changes so that you can always maximize the rent potential.
Flexibility. The space in the property should be easily changed to meet different user needs at minimal costs of time and money.
Specifying repairs to be made before buying is a safer, less costly financial strategy. Estimate them ahead of time, thereby being able to negotiate for a lower price.
Financing trade-offs. To keep loan payments low, negotiate for long-term payout bases at equivalent rates. Include in your estimates the initial costs of the loan and the repayment costs and privileges.

A Comfort Zone in Loans and Investments

Wed, 01 Jul 2026 10:45:00 -0400

A Comfort Zone in Loans and Investments

Each investor has a “comfort zone” about loans. The leverage seeker wants the largest loan that is practical. Others may have experience or training that calls for no loans at all. They must have the property free and clear.

Most of us have a loan comfort zone somewhere between these extremes. Nearly everyone accepts the idea of some sort of mortgage. The use of OPM (other people’s money) makes sense.

The comfort in loans may affect the type of investment. Many of these “free and clear” owners prefer land as the investment. They want no improvements on it, just the bare land.

Here’s some of the benefits of investing in unimproved land. These can make a lot of sense.

There are no tenant problems. There may be a simple lease for farming or grazing, but only limited contacts between lessor and lessee. Often, the investment land lies unused.
A well-chosen land investment can result in huge profits. We have all heard stories of owners who have purchased land for just a few dollars an acre, then later sold for millions! (The key is “well-chosen”).
Land is a secure investment. Even in the worst economic situations, the land is still there. Value can fluctuate, but the investment will not disappear.
Land represents wealth. It can be a quick source of cash for an owner to use for another investment. Land looks good on a financial statement. It adds permanence and stability to an applicant for loans or for a line of credit.

The Shopping Center Lease

Wed, 01 Jul 2026 10:44:00 -0400

The Shopping Center Lease

When leases for shopping centers are being drafted, they can be more difficult than most other commercial leases. In a shopping center, the owner wants the leases to be as uniform as possible, but knows that each lease must have variations to meet the individual tenant’s particular problems in business and in certain size or shaped spaces.

Here are some suggestions of items that should be covered in your shopping center leases. There could be many more depending on each property.

Type of Operation; What is the business? The lease must clearly state the type of business conducted in this unit.
Effective Date of Rent; The minimum guaranteed rent should commence a specified number of days after the center has completed the premises or when goods or services are offered for sale to the public, whichever of these two events occurs first.
Amount of Minimum Rent; The lease states the monthly and annual rent. It should also provide that if the gross leasable area is larger than that recited in the lease, the minimum monthly rent will increase by a specified amount each month.
Computation of Percentage Rent; The lease should show how percentage rent is computed, when payments will be due, and what will be included in gross sales for determining the percentage rental (e.g., vending machines and mail order sales). This clause should also specify how frequently the tenant will be required to submit sales reports to the landlord and that the tenant’s annual sales report must be prepared by a certified public accountant.
Costs of Common Areas; The tenant should be required to pay its proportionate share of the costs of operating the center’s common areas, including the following:

Repairs
Light Bulb replacement
Landscaping
Security
Cleanup and Snow removal
Parking lot sweeping
Restriping parking spaces
Garbage removal
Real estate taxes
Liability and property damage insurance
Depreciation on equipment and machinery and any other costs of operating, and maintaining common areas.

Employee Parking; As the landlord, you should reserve the right to control employee parking. You should also provide that you have the right to remove any unauthorized people from the parking areas, as well as from any common areas.
Center’s Merchant’s Association; The lease should provide that the tenant must be a member of the center’s Merchant’s Association.
Signs; As the landlord, you have the right to approve the size, placement, and contents of any and all signs within the center. Such a provision may prohibit paper signs, exposed neon signs, sandwich boards, etc.
Property Tax Increases; The owner may specify that he will pay the real estate taxes on the leased premises and the underlying land for the first year after the center is open, but that any increases after that will be prorated and passed along to the tenants.
Recapture Clause; Landlords should include recapture clauses in their leases so that they can cancel tenant’s leases if rental deficiencies are not paid.
Permission for Assignment and Sublet; In order to somewhat control the situation, you should have the lease provide that a tenant may not sublet or assign its lease unless it first gets your written consent to do so, and the clause should state that a consent to a particular assignment or subletting will not apply to later assignments or sublettings.
Insurance; The tenant should be obligated to have property loss and personal injury insurance, naming the landlord as an insured. The tenant should be required to insure any boiler on its premises. The tenant should also be required to have fire and extended coverage insurance on its merchandise and fixtures.

The Property Management Plan

Wed, 01 Jul 2026 10:44:00 -0400

The Property Management Plan

Real estate investments can be set up to generate one or more types of returns:

Cash flow to owners;
Appreciation of owner’s capital;
Shelter of cash flow and
Preservation of capital.

Once the owner specifies the type(s) of return desired on the property, the professional property manager can develop an appropriate management plan to generate the desired result.

The abilities of a Professional Property Manager will usually more than make up for the cost of the services. The yield from the property will be maximized and the value will be preserved or enhanced.

In a sense, the property manager and the property owner are partners in maximizing the return on investment of the property.

Who Buys Commercial Property

Wed, 01 Jul 2026 10:44:00 -0400

Who Buys Commercial Property

When we represent a seller of a commercial property, we try to determine, as soon as possible in the marketing process, what type of buyer is most likely to be interested in this particular property. We then focus the main appeal on those elements that are most important to that type of buyer.

Types of Buyers

Normally there are three types of buyers for commercial property:

Investors, who seek an income-producing investment in which to place their surplus funds.
Speculators, who buy so they can sell when the market goes up.
Users, who seek sites for their businesses.

The seller’s agent will appeal to the special interests of each of the three types of buyers. Advertising and marketing materials should develop each appeal and furnish supporting facts, realistic projections, and professional information.

The Appeal

For the primarily income-seeking buyers, we focus on the financial data, concentrating on rentals from the property, terms of the leases, maintenance charges, mortgage information, and net income. We will also demonstrate the probability of income growth from the property.

For the speculator-buyer, the stress is on the potential for a resale profit. We might show that the property is in the line of future development (new public transportation is planned or being built, or there are other newly built or renovated commercial properties as neighbors). Demonstrate that the property is in a growing, vital locale.

Since income is of only a secondary interest to the speculator-buyer, we’ll go no further than the current income status. The focus will be on the potential for profitable resale.

The location will be of greatest interest to the user-buyer. Is it right for the user’s business? Is the building in good physical condition, or must it first be remodeled, improved, or up-dated? We must demonstrate the wealth and habits of the surrounding population.

With each type of potential buyer, the marketing effort will focus where it is most likely to produce a prompt, successful sale.

When you are ready to sell your investment property or are in the market to increase your investment portfolio, our company can help you by giving advice and suggestions on what is available on the market today or help you with setting the sale price for a satisfying profit on the property that you now own.

Investing In Land For Long-Term Profit

Thu, 04 Jun 2026 11:29:17 -0400

Investing In Land For Long-Term Profit

Land is always a good investment for the long term. In past years when investors made real estate investments, one consideration was the tax shelter of certain investments. Now, with fewer shelters, real estate investments must make sense as a dollars and cents return on capital, and must stand alone as a good business move. Land has never been a tax advantaged investment and should be worth considering as a way to increase wealth. The trend has always been up.

In most cases, the land investor spends money each year with virtually no income from the investment. There are expenses of property taxes, clean-up and maintenance costs, expenditures for travel to check on the property.

The Payoff

When an investor puts money into land it is for the potential payoff when the land is sold. It is a very worthwhile investment when the land’s price skyrockets and the “cheap” land becomes highly treasured property.

Types Of Land

Land investments come in three major categories. The ultimate payoff for each of these categories can vary.

Raw Land. Unzoned rural land in its natural condition. This is usually in a remote area. It would typically take many years to appreciate significantly in value. The price to purchase is quite modest, and the costs to own it are small. The investor in this land will usually purchase hundreds of acres and then wait 20, 30 or more years to see a chance to sell at a profit. However, when that time comes, the profits can be incredible. The Florida land boom of the 1920s is an outstanding example.

Pre-development Land. This is land located closer to built-up sections and is located where there is a realistic expectation of development in the near future. It may already have basic zoning and could have utility service. The prices are higher than for raw land, and the costs to hold it are higher. But unlike raw land, the payoff can be much sooner. The smart investor picks an area that has been identified as a “path of growth” and where commercial, industrial, and residential development will soon happen.

Infill Land. This land is between raw land and pre-development land in the sense that it offers a different kind of investment expectation. It may have been passed over for “easier” parcels during the first phase of an area’s development. It could be located in a different direction than the main path of growth of the area.

When a community was originally developed, the suburbs may have extended to a commuting range of 30 to 40 miles. Later, after better highways were developed, commuters were more willing to travel 10 to 20 miles further. These improved highways created new uses for thousands of acres of land. This is land that can be used for homes, shopping centers, industrial or other commercial uses.

Look in Your Own Area

The investor who takes the time to study and can recognize what others don’t yet see, will be the one who makes these profits.

Changing The Use Of Investment Properties

Thu, 04 Jun 2026 11:29:07 -0400

Changing The Use Of Investment Properties

There is a big difference between investing in the rejuvenation of real estate projects and investing in stocks, bonds and other securities. When you invest in securities, you have no control of any factors that can enhance the value. In real estate, you have control of the investment yourself.

In an investment in converting use of buildings in real estate, the investor can use creative imagination to change a property into something that has a much greater value, and even better than before.

But, real estate investments that involve changing the use of property are not for the faint of heart. They are riskier than other investments such as buying an established office building, a hotel or a strip shopping center. There are always unknown factors, more things that can go wrong, and fewer things that you can count on. Success is based more on the future than on the present, and the future must be predicted, partly with respect to the income that the property will be able to earn once the use is changed. Remember, the highest returns go to those who take the highest risks.

A More Profitable Use

Most buildings can be changed so that they can be used for a different purpose other than the one for which they were originally intended. Therefore, the large supply of existing properties, many of them very solidly built, may be converted to a better and more profitable use. Older buildings were demolished in the past, but now more thought is given to recycling and preserving them.

The most common examples are the conversion of farmland to commercial or residential property. In most areas, large houses have been changed into multifamily apartments or condominiums. Investors have converted many former manufacturing spaces and warehouses into shopping and office complexes.

Maybe A Change In Zoning

Expect cooperation from city government. Property that has been declining in condition has also declined in value but can be recycled back to productive use. Immediately the building will be upgraded on the tax rolls to a higher value than before. The city or county now will receive larger tax revenue from the property. A change in zoning is often required for a use-change, but it is regularly granted with little difficulty if the investor has a well thought-out plan, that has the community’s needs in mind.

If the conversion is changing apartments to condominiums there may be no zoning change required. Anytime you can avoid asking the city or county for changes in zoning, time can be saved. Another example of continuing with the same zoning is the upgrading of a shopping strip center or mall through physical remodeling and securing different tenants.

Unusual Use-Changes

Manufacturing or warehouse space has been particularly popular for conversion to residential use in many cities. They have big, open spaces that can be partitioned easily into smaller units; the high ceilings provide an atmosphere that appeals to many people; and the locations are often perfect.

This type of building can often be less expensive and easier to rehabilitate and convert than to fix-up a very run-down apartment building. They are usually just empty shells so it is easy to design the interior according to what your research shows the market wants. Little, if anything, has to be removed.

Apartment occupants or condominium owners respond favorably to the idea of living in former warehouses, shoe-manufacturing buildings, and even in abandoned schools.

An example of a truly unusual conversion was in a western city. Garage facilities that formerly housed and serviced the city’s fleet of trolley cars were converted to a highly successful shopping and entertainment center, which was named Trolley Square. The owners later added new buildings nearby, adding to the economy of the entire area.

In Chicago, the Century movie theater was one of the most ornate structures of the era of elaborate movie houses. The surrounding neighborhood began to decline. The transformation of the neighborhood began when investors bought and refurbished aging apartments nearby attracting a more affluent residential population. The theater was then purchased and transformed into a seven-level shopping center with 100 retail shops. The complex terra-cotta exterior of the theater was preserved, but the interior was completely gutted and rebuilt.

By cautiously evaluating, then changing the use and remodeling the underutilized property, you can share in the sizable profits of property-use-change investments.

How To Turn-Around Negative Cash Flow

Thu, 04 Jun 2026 11:28:45 -0400

How To Turn-Around Negative Cash Flow

In investment properties, when cash expenses are more than cash receipts, there is negative cash flow. Most investors avoid properties where this is the situation, unless there are strong underlying economic factors that indicate the cash flow can become positive.

One six-tenant office building was leased out several years ago. After a few years operating expenses rose sharply and exceeded the gross rental income. However, the leases on all the units will soon expire and there are no renewal provisions. That means that there will be new leases negotiated. Leases that provide for higher rentals will replace the old below-market leases. The building’s negative cash flow will soon become positive.

The underlying economic factors in this example clearly indicate that this office building can easily become a good investment. Just because it has a negative cash flow now is not a good reason to avoid considering the purchase of the property.

Another building is leased as a light manufacturing facility. However, the “best use” of the property is determined to be as a series of small research and development offices or as a conversion to condominium apartments. The negative cash flow from the present use as a manufacturing facility can be turned into positive cash flow when the property is put to its “best use”.

The sole consideration of negative cash flow would have led an investor to avoid this property. In light of further consideration of the underlying economic factors, the underutilized property might well be an attractive investment opportunity.

A vacant lot in the center of town generates only a small amount of income when it is used to sell Christmas trees. But the lot costs money to hold (property taxes and clean-up expenses). There is a significant negative cash flow. But it may be one of the best real estate investments. The unrealized appreciation of market value may far exceed the tax and maintenance expenses so that the investor will profit when he sells the lot, even though he has experienced “negative cash flow” all the time it was held.

Always look at the reasons why there is negative cash flow from income property before you invest. The turn-around possibilities may be readily apparent. Don’t miss out on an otherwise good investment simply because it currently isn’t making money.

Contact Your Property Manager In Advance

Thu, 04 Jun 2026 11:28:31 -0400

Contact Your Property Manager In Advance

The usual way that a property management company comes upon the scene is when the owner of a building makes a contact. Often the owner has just acquired the property through a purchase or exchange, then looks for a manager.

If you are about to acquire an income property, consider contacting the management company in advance. The ability to estimate income and expenses and a keen knowledge of the market makes the professional manager a valuable asset during the preacquisition process. The property manager has the background necessary to provide significant assistance in determining both the location, desirability and economic feasibility of a property.

Inspection And Evaluation

When evaluating a property, the property manager should perform a comprehensive inspection of the physical property, thoroughly review current leases and past maintenance records, and, when appropriate, talk with the on-site staff, and current tenants and neighbors.

Preliminary market analyses and pro formas should be completed during the preacquisition stage to determine the property’s operating costs and to project possible investment return. These analyses will help establish whether the property will perform according to the owner’s investment objectives, or whether the property is too risky for acquisition.

The Rent Structure

When the property is acquired, the management staff will know in advance what can be done with the rent structure. The goal will be to increase the rents to market levels and/or the legal maximum. Tenants with leases can not be given rent increases if their leases prohibit them, but the rent for vacant space or for property with expiring leases may be increased.

The abilities of a professional property manager, as part of our team, will usually more than make up for the cost of their services. Let us help in determining the value of your investment.