Can We Talk?

By Ken Ashley

(ATLANTA) January 21, 2010

The words make your heart beat, don’t they? Whether from a coworker, friend or spouse, when someone asks for time to communicate seriously, you pay attention.

Blah Blah Blah RENT Blah Blah Blah

But in the tenant and landlord relationship how do you have a serious conversation? Like most everything this is governed by the lease. Many miss some subtle but very important communications tools in the so called “Notices” section of the lease. It all seems so, well, so standard and boring. But stick with me as we share a few important tips on the lease communication front.

Men Are From Mars….

It is well documented and understood that you must get your contracts in writing in order to ratify an agreement. In the commercial real estate world we spend many hours negotiating every possible contingency in a real estate lease. We memorialize the landlord’s obligation to deliver the building and services and the tenant’s obligation to pay rent and use the space in a certain manner. After all that negotiating, friendly communication on any related subject is easy, but when it comes time  to have a serious conversation about your lease agreement, be very careful.

Many notices provisions allow the landlord to presume that the notice is sent just because they send it. For example, in many leases because the landlord drops a notice in the mail, it is presumed that the notice is delivered three days later. When a landlord sends you an official notice, it is usually not because he or she wants to invite you to the tenant picnic. This is serious business and you want to have time to respond to whatever the issue is or you risk being declared in default. So don’t allow a presumption of delivery in the notice provision. Instead, the standard ought to be actual receipt as evidenced by certified mail or “nationally recognized overnight carrier” such as UPS or FedX.

We Gave The Letter To The Copier Repair Man

While we are in the mode of having serious conversations, you wouldn’t tell your kid sister to tell your spouse about a really important issue, or else. The same philosophy applies when the landlord tries to insert the concept of a presumption of hand delivery.

It seems so logical; the landlord can bring a notice to your space (rarely is this reciprocal). They drop it off with the receptionists with a serious knowing look. But lets play this out a little. What if they give it to an intern on his way to lunch? What if they give it to the exterminator? What if they give it to an employee you just fired? Do you think you have a good chance of receiving this erstwhile important communication?

The first line remedy is of course to use certified mail or that overnight carrier we mentioned earlier. A back up position is to require the notice be delivered to an officer of the company.

Hello Lord?

When it is time for you as the tenant to ask the landlord for something specific (God forbid), then make sure that the ownership has an affirmative obligation to respond. For example, if you wish to sublease your space and want to submit a proposed company for a subtenancy, then make sure that the sublease clause explains when you will hear back from the landlord with a yes or no.

Other examples include obtaining approvals in the event of a merger with another company or a sale of part or all of your company to another entity (yes, we know that you should negotiate “permitted transfers” in advance, but that’s a subject for another post).

We also see tenants experience frustration when trying to make changes to the space after you move in. Usually this is governed by the alterations paragraph which tells you when you need landlord approval to change your space. Negotiate a realistic timeline for you and ownership to work through issues and be clear about what type of information property management will need to see in order to approve your alterations.

Golden!

Life isn’t perfect, and even with the best lease and the clearest language the contractual relationship we call a lease requires real people to act like real adults. If you took one of those pre-marriage classes you know alot of communication in a relationships should be common sense. But people have bad days, bad weeks and occasionally bad years.

If you have a market lease, then the landlord won’t have unreasonable leverage over your tenancy. The rest can be summed up by the golden rule and not the one about gold coins. And if at the end of the term your landlord doesn’t deliver excellent customer service, then you can in fact exercise the other golden rule and take your coins on down the road.

We’re Not There Yet, But…Moving In The Right Direction

By Ken McCarthy

(NEW YORK) January 7, 2011

C&W Economic Update
US December Employment: Better than it looks, but…

(Below please find a reblog of an excellent report by Ken McCarthy of C&W with his perspective on the release of today’s employment figures.)

US payrolls increased by 103,000 jobs in December, an improvement on the growth in November, but below the general expectation. The good news is the level of employment in both October and November was revised upward substantially. October’s gain, originally reported as +151,000 jobs was revised last month to +172,000 and is now +210,000 and the November increase was revised from +39,000 to +71,000. So over the past three months, the economy has added, on average, 128,000 jobs per month, good, but not enough to substantially lower the unemployment rate on a sustained basis. The unemployment rate did drop sharply in December to 9.4%, the lowest level in a year and a half, but that appears to be a fluke caused as much by people dropping out of the labor force as by hiring.

The job growth was broad based, with increases in almost every major category from manufacturing (+10,000) to retail (+12,000), financial (+4,000) and professional services (+7,000). Leisure and hospitality showed a surprisingly large increase (+47,000) led by employment in restaurants. The largest decline was in Government (-10,000) where sharp declines in local government employment offset an increase in employment in the Federal Government. Private sector employment was up 113,000 and increased by 1.3 million jobs in 2010. At this pace it will be a long time (seven years) before all the jobs lost in the recession are recovered.

In the key office-using sectors employment barely budged, up 7,000 jobs, as the modest growth in professional services and financial was offset by a decline in information (-4,000). This slowdown comes after a very strong and upward revised November, so the trend over the latest three months remains healthy.

For the commercial real estate industry, this report is moderately better than last month, but not very exciting. Employment, the key driver of demand continues to grow at a moderate pace.

I do expect this pace to accelerate in 2011 as the recovery gains momentum. As Fed Chairman Bernanke said earlier today  “…we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold.” As a self -sustaining recovery does take hold, which I anticipate in the first few months of 2011, employment growth should accelerate from the roughly 100,000 jobs per month of 2010 to 200,000 or more per month. That sort of growth will lower unemployment and boost demand for space substantially.

We’re not there yet, but the economy is moving in the right direction.