Charlotte NC Commercial - Blog #commercial tenantsCharlotte NC Commercial - Blog #commercial tenantshttps://www.charlottenccommercial.com/blogs/tag/commercial-tenantsFri, 17 Apr 2026 14:33:04 -0700http://zoho.com/sites/<![CDATA[Problems With Rent Free Concessions]]>https://www.charlottenccommercial.com/blogs/post/problems-with-rent-free-concessions

Problems With Rent Free Concessions

Commercial property goes in cycles from full occupancy to overbuilt with vacancies. When it has been difficult to rent, various concessions have been made to get tenants in and paying rent.


Free rent concessions have been used sometimes to help fill a building. This may have created more problems than it solved.


As an example, suppose there is a building where office space is offered at $25 a square foot on a five-year lease. The lease can be renewed for an additional five-year term at a negotiable renewal rate. To get tenants into the property, the owner gives a concession of free rent for the first two years. This may sound like an acceptable, though extreme solution, but might not be good for either the owner or the tenant.


The bookkeeping and tax preparation for these two years can be a major problem for both the tenant and the owner.


The landlord has no income from this tenant during the two-year period of the rent concession. This can create a cash flow problem for him.


The tenant’s cash flow is incredible during the first two years, since he is paying no rent at all. Then it jumps up to the $25 a square foot level for the remainder of the lease. This can cause a cash flow crisis for the tenant.


Since the property has such a severe vacancy problem that the owner considered the free rent concession in the first place, he might consider a new manager, or a sit down session with the current manager on how to solve this vacancy problem with some creative ideas other than free rent.

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]]>Wed, 01 Apr 2026 13:10:00 -0500<![CDATA[Corporate Shared Office Space]]>https://www.charlottenccommercial.com/blogs/post/corporate-shared-office-space

Corporate Shared Office Space

The Buyer
With the revolution in communications, building owners must keep up with the changing needs of the corporate tenant. Often the larger, well-organized businesses do not need the space that was necessary just a few years ago. Electronic communications to and from employees have substituted for leased office space. Managers are more willing to grant favorable lease terms to operators of shared space. The operator sometimes receives a monthly management fee for operating the shared space plus a portion of rent revenues over a certain amount.

Solving Tenant’s Needs
Tenants in an office suite are offered a private office within the suite that has a receptionist, secretarial help, conference rooms and other amenities. This can be a big saving for small space users or users who need a small office for only a short period of time. Another user is from the large corporation that needs small branch offices in different parts of the country. Other users might be individuals who need a private space for investment or other work activities as well as professionals such as attorneys or accountants who work primarily away from their offices.

Existing Leases
Companies that have excess space that cannot be leased in its entirety can use the concept of shared space. The company’s existing facilities such as copier rooms, computer work stations, reception areas already are available. Any income from this type of shared space can be nearly 100% profit.  If this is space that is leased by the company rather than owned space, the lease must be reviewed carefully to see if a sublease could violate the sublease/assignment clause of the lease.
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]]>Sun, 01 Feb 2026 13:27:00 -0500<![CDATA[Question A Provision In The Lease]]>https://www.charlottenccommercial.com/blogs/post/question-a-provision-in-the-lease

Question A Provision In The Lease

When a landlord and a tenant agree to a commercial lease, it may contain clauses covering things that neither party to the lease ever expects to happen. Occasionally, one of these will happen with costly and damaging consequences to the tenant.

One lease clause that may seem very reasonable to a tenant is one that agrees to subordinate the lease to any future mortgages that the landlord may place on the property. After all, it is reasonable for an owner to want to refinance a property. The result of the provision is that the foreclosure of a mortgage loan will either automatically terminate the lease or entitle the lender, at its option, to terminate the lease (depending on the law of the state involved).

Tenants entering into leases at current market rentals often assume (if they think about the problem at all) that any foreclosing lender will be happy to keep them as tenants. This may not be the case, however, if market rents have risen sharply or where a tenant has received substantial concessions in the form of free rent periods or below-market renewal options–a common situation in an oversupplied marketplace.

As a result, a tenant who may have spent hundreds of thousands of dollars in improving office premises or fixturing commercial space could conceivably be put out of business in the event the landlord defaults on the mortgage. At the very least, the tenant may be able to retain possession of the premises only by accepting a lease with much less favorable terms.

Non-Disturbance Agreement
The landlord wants the lease to be subordinate to mortgages because financing otherwise might be unavailable. A lender may not be willing to finance a property if, in the event the lender takes over, it will be saddled with the existing leases that may be the cause of the landlord’s problems.

A small tenant in a large building is not likely to get very far in seeking to eliminate the subordination clause. However, an office tenant taking a large block of space, or a commercial tenant prepared to invest a substantial amount in a restaurant or retail facility, is in a stronger bargaining position. Such a tenant may agree to subordinate only if the tenant receives in return a non-disturbance agreement (also known as a recognition agreement). This provides that so long as the tenant is not in default under its lease a foreclosing lender will recognize the lease and permit the tenant to remain in possession for the balance of the lease term. The clause normally also provides for “attornment,” that is, requiring the tenant to acknowledge the lender (or other third party) as its landlord entitled to receive rent.

Will the Lender Agree
A Lease that provides for tenant subordination only in exchange for a non-disturbance clause will not guaranty that a future lender will agree. At the very least, the lender may insist that certain conditions be met before the tenant will be assured of non-disturbance. These conditions should be included by the landlord in the lease clause itself.

Typically, these include the following:
  • The lender must not be liable for any unperformed obligations of the original landlord (e.g., unpaid tenant allowances) or be obligated to recognize any rent prepayments by the tenant or future periods of free rent.
  • The tenant must not be in default under any provision of the lease.

Note: The main objection of a lender to giving a non-disturbance agreement if the lender takes over the property is that rents may have risen above the contract rental. The landlord then may want to include in the lease a provision that, in the event a lender does take over, the tenant will agree to pay the market rent (as determined by an independent third party). A tenant is not likely to agree to this, except possibly in exchange for an option for the tenant to cancel the lease if the new rent is unacceptable.
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]]>Sun, 01 Feb 2026 13:25:00 -0500<![CDATA[How To Understand The Different Commercial Lease Types]]>https://www.charlottenccommercial.com/blogs/post/how-to-understand-the-different-commercial-lease-types
This month's newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space. In this issue
  • How To Understand The Different Commercial Lease Types
Whether times are good or bad, lenders always have foreclosed properties in inventory. During a recession the inventory may be high. One of the problems that banks and insurance companies have is disposing of this real estate owned (REO). They are faced with the decision of whether they wish to dispose of the property immediately or hold it for a period of time to hope for an increase in value. They would like to see the value of the REO increase to equal the loan amount......(more)
  • Lenders and Property Managers A Service Joint Venture
With the revolution in communications, building owners must keep up with the changing needs of the corporate tenant. Often the larger, well-organized businesses do not need the space that was necessary just a few years ago. Teleworking with computers, faxes and e-mail have substituted for leased office space. Office personal are working from home or a small office near their home and coming into the office once in a while for a meeting. Managers are more willing to grant favorable lease terms to operators of shared space.......(more)
  • ​​​​Prospective Tenants For Commercial Centers
Owners must think about vacancies when checking a prospective tenant. Will the tenant’s business survive? When you have a prospective tenant for a commercial center, you must consider whether that prospect would be a good tenant. There are two key standards to apply; (1) the prospective tenant’s financial stability; and (2) the prospective tenant’s potential for success.....(more)
  • Providing Rentals For Seniors
Not all retired people want to own their own home. Many prefer to be tenants. Many feel that the proceeds from the sale of their old home can be used to supplement their pension and social security, rather than reinvested in another home. The money can be used for travel, visits to children and grandchildren or for medical expenses......(more)
    Click Here For This Months Newsletter
]]>Thu, 01 Oct 2020 11:20:17 -0400<![CDATA[Commercial Leasing and 1031 Exchange Tips]]>https://www.charlottenccommercial.com/blogs/post/commercial-leasing
This month's newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space. In this issue
  • Lenders Need Professional Property Management
Whether times are good or bad, lenders always have foreclosed properties in inventory. During a recession the inventory may be high. One of the problems that banks and insurance companies have is disposing of this real estate owned (REO). They are faced with the decision of whether they wish to dispose of the property immediately or hold it for a period of time to hope for an increase in value. They would like to see the value of the REO increase to equal the loan amount......
  • Having Knowledge About Commercial Leases
A lease is an integral part of many real estate investments. It should outline all the obligations of the tenant and of the landlord. This sounds simple, but many questions arise. If, for example, property taxes increase, does the tenant pay all of the increase or only part of it? If the property must be modernized, who pays for the improvement? Can the tenant be moved out during the renovation? If the costs of servicing the property rise, should the tenant pay none, all, or part of the increased costs? How should inflation be handled—with automatic rental increases? With increases tied to some index, perhaps the Consumer Price Index? Kinds Of Leases.....
  • Combining A Tax-Free Exchange And A Leaseback
Here is a moneymaking transaction that can be used by many business owners who also own the real estate where that business is located. In any community there are dozens, even hundreds, of property owners who can utilize this formula.....
  • Important 1031 Exchange Rules and Timelines
There are 2 timelines that anybody going for a 1031 property exchange should abide by and know......
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]]>Sat, 01 Oct 2016 16:14:24 -0400<![CDATA[How To Negotiate A Sublease]]>https://www.charlottenccommercial.com/blogs/post/how-to-negotiate-a-sublease
With changes in business strategies, some existing tenants wanted to sublease all or some of their rented office space to eliminate some locations and shrink operations in others. In this situation, the problem for landlords is whether it is a better strategy to enforce lease restrictions against subleasing or to work with tenants on the theory that the sooner cheap sublease space is filled, the better for all. (In addition, another problem could be whether landlords should insist on sublease restrictions in new leases being negotiated now.) Lease Restrictions If there is no provision against the sublease in the original lease, the tenant has the right to assign or sublease without the owner’s consent or approval. However, most leases do contain this provision. In the mid-1990s, when rents were at high levels, tenants could obtain the landlord’s consent only if no other space was available in the building, and even then, the landlord might have insisted on sharing in any profit realized on the sublease. (In those days, sub-rent was often higher than the prime rent.) At this time, few tenants are trying to sublease for a profit. Instead, they are interested in cutting costs of unused space and are often willing to accept current market rents, something landlords are reluctant to do for prime space. Landlord and Tenant Cooperation Although the building owner may take the position that no consent will be given to a sublease as long as prime space is available in the building, the tenant may make some good arguments for cooperation. First, when there is much space available all around, a tenant looking for space can find it easily. A landlord is better off having a tenant in possession, even with a sublease, because the tenant may stay when the sublease expires. Second, the landlord takes the risk that a prime tenant with much excess space may default under the lease either by being forced out of business or because the tenant is willing to risk a lawsuit to collect unpaid rent. By being cooperative in finding a subtenant, the landlord reduces the risk of a default by the prime tenant and has the additional security of the subtenant’s rent payments (even though the amount may be less than the prime rent). Perhaps most important, the landlord may gain the reputation for good tenant relationships that can help in the competitive years ahead. Helping the tenant to shed excess space can pay off when the tenant considers renewal of the present lease. Landlords who are known for taking a reasonable approach to tenant problems, both during and after lease negotiations, are bound to have an edge when a tenant must make a choice between very similar rental space in different buildings. Full Newsletter
]]>Sat, 19 Mar 2016 16:43:27 -0500<![CDATA[What to look for when investing in apartments]]>https://www.charlottenccommercial.com/blogs/post/what-to-look-for-when-investing-in-apartments
This month's newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space. In this issue
  • Things to look for before investing in apartments
With real estate values stabilizing, apartment properties throughout the country are the most sought after rentals. Assisting new buyers with the purchase of a residential rental is the job of the commercial broker. When you are looking at different properties, we will furnish full information on existing and potential loans, income, expenses, etc., to help you make the right choice......
  • The insurance that owners must require tenants to carry
Insurance coverage must be addressed by both landlords and tenants. For the run-of-the-mill daily problems, a landlord must have the maximum coverage for the building and the tenant’s leases. The tenant must cover the business with coverage that will protect it. What if you have a small disaster that is easily repaired, but you lose a tenant because he was not covered for the damage inside the business?....
  • How Options are great investment tools
An option on real estate is an extremely versatile investment tool that comes in a variety of forms that can be used for a variety of purposes. The primary use of the option is that it gives the optionee.....
  • How to cure vacancies with investment properties
When an investment property is located in an overbuilt market, the marketing effort must have good planning and direction. Just throwing large amounts of money into the effort can be a waste. Rather than broad advertising, a narrower action, keeping the local brokers who specialize in leasing constantly updated about the amenities of a certain building may be the best way to make it more marketable.....
    Click Here For This Months Newsletter
]]>Tue, 06 Jan 2015 00:39:12 -0500<![CDATA[Negotiating Profits on Leased Property]]>https://www.charlottenccommercial.com/blogs/post/negotiating-profits-on-leased-property
This month's newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space. In this issue
  • Negotiating Profits on Leased Property
When we write or talk about real estate “investments” it is usually with the idea of ownership of the property. When you own the investment property, the opportunities for profits and cash flow from it are thought of as rent paid by a tenant to the owner. The owner also has a potential profit that can come from the later gains when the property is sold.......
  • Extreme Leverage With Options
Leverage is the use of borrowed money to control something of value. Real estate investments for many years have afforded the investor some extreme leverage situations. Let’s examine leverage. If double-digit inflation returns, controlling the maximum amount of real estate may be extremely desirable......
  • Cooperation Between the Owner and Developer
The acquisition and improvement of land is a large-scale operation and requires large amounts of capital. This has created methods of land acquisition that gives the developer access to and control over a large enough tract to make development economical without requiring an initial outlay of all of the capital necessary to acquire such a tract.......
  • Commercial Real Estate Representation
There are a number of ways to buy, sell or exchange investment or commercial real estate. Having the knowledge of what you can do in some tax situations can be the difference between an annual profit or loss in a property that you intend to acquire or one that you already have in inventory......
    Click Here For This Months Newsletter
]]>Thu, 20 Nov 2014 05:23:22 -0500<![CDATA[How to Invest in Industrial Real Estate]]>https://www.charlottenccommercial.com/blogs/post/how-to-invest-in-industrial-real-estate
This month's newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space. In this issue
  • Investing In Industrial Properties
If you haven’t considered industrial properties as an investment vehicle, it may be time to take a look. Warehouse and distribution (W&D) properties are of interest because their standard layout suits a wide range of users, in contrast to specialized manufacturing facilities. Industrial properties look good for the following reasons...
  • Partners Making A Tax-Free Exchange Of Partnership Property
There are many limited partnerships that own rental property. Suppose a real estate limited partnership plans to sell rental property of the partnership to a third party and one or more of the partners wants to defer tax through a tax-free exchange (rather than receiving cash for their partnership interests). It is important that the proper procedure be followed so that an actual exchange takes place between the partners seeking a tax-free exchange and the third party. The partners desiring the exchange will have to follow these rules...
  • “Green” Buildings Bring Profits
Any savings in expenses that have already been budgeted can be turned into spendable income. One expense that can be controlled to some degree is the energy used for lighting and for air conditioning. The emphasis today is on “green” buildings. A truly green building must be built from the ground up. However, much can be done on an existing building...
  • Pre-Leasing To Secure Construction Financing
There are some indications that banks will be making some loans on real estate during this year. Even if they do, the borrower will have to have documentation on everything. Loan application must be perfect...
  • Reviewing Overdue Rents
A critical indicator of a management company’s success is their effectiveness in controlling overdue rents. A well-run property should not have chronically delinquent tenants. However, when delinquency does occur, immediate ac. or for those who have partially paid rents and other monies due. In addition, a delinquency report recording the motion must be taken. A list of all delinquent rents must be prepared showing all tenants who have not paid and date of all collection attempts should be prepared. Click Here For This Months Newsletter
]]>Fri, 09 May 2014 00:24:49 -0400<![CDATA[How to Fix Problems With Income Properties and Profit]]>https://www.charlottenccommercial.com/blogs/post/how-to-fix-problems-with-income-properties-and-profit
This month's newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space. In this issue
  • It is Easier to Keep Tenants Than Find New Ones A property manager may spend quite a large amount of money advertising to fill vacancies in a building. Once the tenants are in, everything within reason is done to keep them happy and paying the rent. It is difficult when one of these tenants is enticed to move to another location.
  • How to Fix Problems With Income Properties For Profit There are always problem properties in any community. Some are only troubled or problem properties because the current owner does not know how to fix them (or will not). The present owner may have failed to do fairly simple things that can solve the problems. This can be an opportunity for someone who can do the work. Buying a property and solving problems that plague it is a profit-making business.
  • Advantages and Risks With Investing In Single Tenant Properties Around 25% to 35% of the value of commercial properties are single-tenant properties (STPs). This large percentage means that institutional investors such as pension funds, as well as smaller investment groups must consider this type of investment. There are many uses ranging from office to industrial to retail. They can include office buildings, warehouses, department stores, supermarkets and other retail use. There are advantages and disadvantages in this type of ownership compared to multi-tenant properties.
  • How to Make the Right Investment at the Right Time The recession has affected real estate more than economic turndowns in recent decades. The government reports that this economy is now showing signs of a turnaround. If it is improving, now may be the time to start thinking of the next real estate investment.
Click Here For This Months Newsletter
]]>Sat, 01 Feb 2014 11:00:49 -0500