Nothing But “Net”, and Other Lease Types

If you are out in the market looking for space you may notice there is a huge gap in rental prices. We agree, the market today is very volatile and landlords have all sorts of different prices that they are willing to accept. However the biggest question you should ask yourself is if you lease “what else are you going to pay for”?

Each month when you as a tenant write a check to the landlord that may only cover a portion of the rental obligation. Depending on the type of lease you may have to write more checks. The spectrum of leases looks like this:

Full Service

Gross

Modified Gross (or Modified Net)

Triple Net

As you move from the top of the list to the bottom you will find the tenant comes out of pocket for more of the expenses. At the bottom there is the triple net lease; in this lease the tenant has to pay a base rent and additional rent for all expenses associated with the space (taxes, plowing, building insurance etc). In a modified gross scenario both parties agree that the expenses should be divide somehow. Perhaps the landlord pays for the taxes and insurance, but the tenant pays for the utilities. When we move up to a gross rent, the landlord is now paying for most all of the expenses and the tenant is writing one check only to the landlord. However, the tenant may still have to pay for the increases of these expenses over time. A full service lease is a gross lease on steroids (my apologies to major league baseball). Full service denotes a single payment to a landlord from the tenant, but the landlord is adding in some items that may not be typical such as interior cleaning or data.  But these are all hypothetical at it is important to review your lease to see what is or is not included.

In the end most people look at these leases and think that one is more or less expensive that the other. The reality is that the lease type has little bearing on the overall expense. If two buildings were exactly the same across the street from one another, except one was triple net and the other was marketed as full gross, our experience would tell us that in the end the total payments made by the tenant to the landlord would be about the same. The big difference is in the risk on the expenses. On a triple net lease, the tenant has the most exposure to the increases in taxes and other common fees. Depending on how your gross lease is written, you may have all or only partial exposure to these risks.

There are no guarantees and leasing is no exception. As such there are no “standards” when it comes to lease language, you must consult your own lease and your own counsel if necessary.  However, our team is always available should you have any questions on this clause or any other’s in your lease, we will be happy to point in the right direction.

Acquisition of NAI Global by C-III Capital Partners in Complete Local affiliate NAI Norwood Group to benefit from acquisition.

Bedford, NH – NAI Norwood Group is the New Hampshire affiliate of NAI Global, the largest network of independent commercial real estate firms worldwide. Today it was announced that its previously reported acquisition by C-III Capital Partners LLC (C-III) has been completed. The transaction will help create a leading fully integrated commercial property services company that will operate in markets around the world.

C-III is a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, title services and multifamily property management. C-III is led by CEO Andrew L. Farkas, who founded and was Chairman and CEO of Insignia Financial Group, Inc. (NYSE:IFS). Its principal place of business is located in Irving, TX, and it has additional offices in New York, New York; Greenville, South Carolina; McLean, Virginia; Chicago, Illinois; Dallas, Texas and Nashville, Tennessee.

NAI Global will continue to operate as a separate company under its current management. C-III will accelerate NAI Global’s growth by exploring business development opportunities in strategic locations, including New York, London, Singapore and other primary global business centers. It will also invest in the growth of the corporate solutions and capital markets offering, expanding asset/property management, project/facilities management and valuation services worldwide.

“We are thrilled to be joining forces with C-III and excited about the opportunity to deliver an even broader range of services to our members and add greater value to our collective corporate and investment clients. We look forward to tapping into their extensive resources and expertise to assist all of our clients in strategically optimizing their commercial real estate assets,” said Jeffrey M. Finn, President and CEO of NAI Global.

Founded in 1977 by Gerald Finn, NAI Global has grown from covering 15 countries in 1999 to offering a full, collaborative platform of services to clients in over 350 offices in 55 countries, with over 300 million square feet of commercial space under management.

NAI Norwood Group will still remain locally owned and operated as it has been since 1968. “We are particularly pleased to be part of this dynamic company, which will add significantly to the services we can provide to our clients not only in our local market but Nationally and Internationally as well”. Stated Karl Norwood, President of NAI Norwood Group. The firm has sixteen agents in two offices in Bedford and Portsmouth. The firms focus is on the selling, leasing, consulting and development of third party commercial real estate.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms. Whether your commercial real estate needs require local expertise, or you need brokerage consulting around the work, the firm is here to help. With our extensive background and strong local contacts we are able to assist in negotiating leases, sales, investments, relocation, site selection and development. Please contact one of our offices for more information. Bedford, NH (603) 668-7000 or Portsmouth, NH (603) 431-3001.

American Medical Imaging Relocating to Portsmouth

Portsmouth NH - Brian O'Brien Vice President/ Managing Broker of NAI Norwood Groups Portsmouth office announces that American Medical Imaging has leased 4,478 SF at 100 Griffin Rd., Portsmouth, NH.  Brian O'Brien of NAI Norwood Group represented the Landlord JFF Real Estate Ltd., and Thomas Farrelly of Cushman Wakefield of NH represented the Tenant, American Medical Imaging. American Medical Imaging’s choice to relocate to Portsmouth is a testament to the desirability of the business climate in Portsmouth and the Seacoast area. During these challenging economic times companies are analyzing in-depth potential expansion and relocation decisions. The Seacoast area and Portsmouth in particular, offers the perfect combination of growing demographics, superior quality of life, and attractive business climate to continually attract new business to the area.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their strong local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603)668-7000 or 100 Market Street Suite 200, Portsmouth, NH 03801 (603) 431-3001.

Panera Bread Company Leases Space at Pinkerton Place in Derry

DERRY, NH - NAI Norwood Group is pleased to announce that Panera Bread Company has entered into a lease agreement for a 4,100 +/- SF free standing building with drive thru at the retail development project "Pinkerton Place" in Derry, New Hampshire. Pinkerton Place, located at 19 Manchester Road, has received full approvals for 49,000 +/- SF of retail space on approximately 8.5 acres and is currently under construction. According to construction manager, Randall LaClaire, Panera Bread should be open for business this summer. Pinkerton Place is a well located retail project at the corner of Route 28 (Manchester Road) and Ashleigh Drive in front of a new Wal-Mart Supercenter, scheduled for completion in 2012.

Brian O'Brien and Chris McMahon of NAI Norwood Group's Portsmouth, New Hampshire office represented the Landlord, Boomer Wolf, LLC in this transaction. Harmon Lewis of National Commercial Brokers represented PR Restaurants, LLC a Franchisee of Panera Bread Company. NAI Norwood Group is the exclusive broker for the remaining available retail space available at Pinkerton Place.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their strong local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 100 Market Street Suite 200, Portsmouth, NH 03801 (603) 431-3001.

Nothing is Certain Except CAM and Taxes

written by Chris Norwood, NAI Norwood Group

The New Year’s parties are over. The champagne flutes and funky glasses are packed away for another 12 months. It is that time of year for resolutions and CAM review.

It is time to break out the lease and find out who is responsible for increases in expenses. Common Area Maintenance (CAM) and Taxes are expenses that are paid for by a tenant in a triple net lease. When the Real Estate Taxes or the CAM go up (or down in some cases) the tenant is responsible. Even in some gross or modified gross leases the tenant still has to pay for the overage charges if the expenses go up.

Typically as a tenant pays their rent on a triple net basis, the monies that get paid in rarely equal the actual expenses. Snow falls differently than budgeted, there is more landscaping that takes place, or the taxes went up. At the beginning of the new year the tenant should received a statement of what they paid in and what the new budget for the following year is. For triple net and some gross leases the tenant will be responsible for this increase marching forward. On most triple net leases the tenants will also have to look back over the previous year and come out of pocket for any difference in the expenses in one stroke.

If you are a landlord or a tenant, take the new year to review these clauses of your lease. In addition be on the lookout for expense “stops”. A stop is when one of the parties has a cap on their exposure to increases. For example there may be a tenant “stop” of a 3% increase annually on real estate taxes. Therefore a tenant shall pay for the first 3% increase but then the landlord picks up the balance. You should look into these details on your lease to see what your exposure is.

There are no guarantees and leasing is no exception. As such there are no “standards” when it comes to lease language, you must consult your own lease and your own counsel if necessary.  However, our team is always available should you have any questions on this clause or any other’s in your lease, we will be happy to point in the right direction.

NAI Norwood Group Brokers Lease at Exeter Commons

Exeter, NH - Chris McMahon of NAI Norwood Group's Portsmouth, NH office has leased 6,000 +/- SF of retail space to Exeter Paint and G&N Flooring by Design at Exeter Commons Shopping Center on Portsmouth Avenue in Exeter, NH. Exeter Paint and G&N Flooring By Design, the newest additions to Exeter Commons, are both locally owned businesses which have shared retail space on Portsmouth Avenue in Stratham for the past 10+ years. When Abba Medical Supply decided to close their large store at Exeter Commons and downsize, Chris saw the perfect opportunity for these two complementary businesses to occupy the vacant space and add to the shopping centers unique tenant mix. Through a creative approach, the Tenants and the Landlord, REL Commons, LLC were able to put together a great space at Exeter Commons for both Tenants to share and operate independently. Both businesses are expected to open at Exeter Commons by April 1st, 2012. For more information about Exeter Paint please visit www.exeterpaintstores.com and for more information about G&N Flooring by Design please visit http://www.gnfloorbydesign.com. Chris McMahon from NAI Norwood Group is the leasing agent for the Landlord, WJP Development at all of their New Hampshire shopping centers.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their strong local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603)668-7000 or 100 Market Street Suite 200, Portsmouth, NH 03801 (603) 431-3001.

NH CIBOR Inducts New President

Bedford, NH – In 1976 the Commercial Investment Division (CID) of the New Hampshire Association of Realtors (NHAR) was formed. In 1993, NHAR voted to change the CID into the New Hampshire Commercial Investment Board of Realtors (NH CIBOR). Now over twenty years later, Chris Norwood of NAI Norwood Group is taking the reigns as the organizations president. In a ceremony held on December 14^th, 2011, Norwood took the oath of office for 2012.

In his “stump” speech he discussed some of the benefits of the organization most notably the work done through NHAR on public policy. Last year over 80 New Hampshire real estate specific bills were reviewed. With the help of NHAR, NHCIBOR and many other volunteers these bills were reviewed and discussed so that property ownership rights could be heard. In addition Norwood discussed other membership benefits upcoming in 2012.

NAI Norwood Group is pleased to have him serving the greater community of commercial real estate brokers and their clients. Of note, he is part of the first Mother/Son duo to serve as NH CIBOR Presidents. Louise Norwood served as NH CIBOR president in 1998.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their strong local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603)668-7000 or 100 Market Street Suite 200, Portsmouth, NH 03801 (603) 431-3001.