Product Feature: RateBlend.com

What do the top commercial real estate professionals all have in common?   Simple, regardless of high commercial vacancy rates and a lack of demand for space, they still outperform others in the industry.

How is this possible?

The top commercial real estate professionals are extremely creative individuals and exceptional communicators. No matter the level of adversity, they evaluate their environment and industry conditions, then, they figure out a way to get space leased.

The common opinion amongst industry professionals is that there is very little demand for space, and when they encounter a tenant actually looking to lease commercial space there is a HUGE disconnect between the pricing expectations of the Tenant and the Landlord, making it extremely difficult to negotiate a commercial lease and come to terms.

Putting a  deal together.

Tenants feel that the market is so bad, that they make offers to leasing agents that are sometimes even insulting. But, what most successful leasing agents do is brilliant; they welcome these offers and then work with these numbers in a highly creative fashion.  Demonstrateing to the tenant, that not only do they want them as a Tenant in their commercial portfolio, but are also willing to work with their budget. The leasing agent acts as a creative “bridge” and that makes a pivotal difference.

A property owner asking $2.00 Full Service gross (FSG), per square foot, per month, for a 5,000 square foot space, may get an offer from a Tenant for $1.65 FSG for 36 months. Some would find this ridiculous and insulting; but the successful leasing agent responds with something like, “What if I can get you really close to your $1.65 FSG and at the same time get the landlord the lease rate he wants?” The Tenant may be confused by the agent’s statement, but what the leasing agent does next is magnificent! He sends the Tenant a non-binding Letter of Intent (LOI) at a lease rate of $2.00 FSG, per square foot, per month, with a spreadsheet attached. Then the agent explains to the Tenant that the attached spreadsheet is an “Effective Lease Rate Worksheet” and that although the lease rate on the LOI says $2.00 FSG, per square foot, per month, the Tenant is actually paying $1.64 FSG.

The leasing agent’s knowledge of the property owner’s goals are to achieve a face rent of $2.00 FSG, so that the investors are happy, provide no more than 6 months of abated/free rent, and provide nothing more than paint and carpet in Tenant Improvements. The leasing agent explains this to the Tenant and shows how the numbers work out. He points out in the effective lease rate worksheet that the Landlord is charging the Tenant a rent of $2.00 FSG for 36 months with an additional 6 months of abated/free rent spread throughout the lease term (total 42 month lease term) and providing the Tenant with new paint and carpet (estimated to cost $15,000.00).

Once the Tenant understands the math of the total lease consideration, minus the abated/rent and Tenant Improvement concessions, the Tenant then confirms receiving the lower effective rent of $1.64 FSG, per square foot, per month. Click here to view worksheet. This exercise then lubricates the entire leasing process for the Agent and it is much easier to consummate a lease contract. It is almost magical.

RateBend helps make the deal happen.

Sometimes expectations between Tenants and property owners are so disparate, that there is no solution. However, generally there is little complexity in leasing commercial space, as long as the parties negotiating fully understand the deal and recognize their mutual goals have been bridged. The truly remarkable thing is how the leasing agent has “creatively” bridged the needs of the parties and effectively communicated the financial engineering behind it designed to meet the needs of each party. This is why these commercial real estate professionals close more deals. You can close more deals too.

The goal of RateBlend.com is to help agents to quickly create and send effective lease rate worksheets that they can send along with their proposals, showing the Tenants the rent savings after concessions.

About RateBlend.com:RateBlend is a free web-based effective lease rate calculator used by commercial real estate professionals to help them close more commercial real estate deals. RateBlend is currently in Beta. Visit www.rateblend.com for more information.

Written By: John Pierce, Product Experience Director at RateBlend.com

Screenshot: Click to enlarge.

Duke Long

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