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5 Reasons Commercial Real Estate Occupiers/Tenants Benefit from Using a Tenant Rep Advisor

5 Reasons Commercial Real Estate Occupiers/Tenants Benefit from Using a Tenant Rep Advisor  morrissegroup.com
Lease Agreement

Negotiating the new normal during the pandemic’s fallout and beyond

Over the past few months, we’ve written a lot about the impact COVID-19 has had on commercial real estate. In a short span, the landscape drastically changed—from commercial real estate (CRE) prospects to rent strategies to strategies for business survival.

Another area that has been affected is the role of tenant advisors. For many tenants, the reasons they chose an advisor in a pre-pandemic world have taken on an urgent and even essential character. And in some ways, tenant reps are uniquely positioned to help businesses manage a new normal characterized by new space requirements, issues, and opportunities.

1. Negotiation

When it comes to tenant broker/advisors, many people believe their sole purpose is to broker lease negotiations. In fact, there are many other benefits. But there is no denying that knowledge of comparable amenities and monthly rents, as well as keeping a wary eye out for hidden fees, lease pitfalls, concessions, and confusing language all come together to assist the tenant in achieving the best terms.

2. Access

It’s common for a tenant to search for available properties on public websites. But these sources are only the tip of the CRE iceberg. A professional and well-seasoned tenant advisor, armed with local market experience and internal tools of the trade, will have greater access to properties, many of which will be better suited to your needs and price range.

3. Networks

Tenant reps, particularly those who are well-established, can recommend a team of experts to assist the tenant in turning a newly leased space into something that meets his or her needs. The importance of this service has grown as businesses must adapt structures to social-distancing requirements. Resources can include architects, designers, space-planning experts, air-quality companies and maintenance contractors.

4. Representation

In most cases, tenant rep fees—just like fees for the listing broker—are covered in the price of the leased space. In other words, landlords already expect that a tenant rep will be part of the process. In transactions without the involvement of a tenant advisor, the landlord’s leasing agent will just be paid more. When a tenant contracts with a qualified advisor, it’s an indication that they are serious about negotiating and will do so in good faith. And the advisor always maintains a constant focus on the tenant’s interests.

5.  COVID-19

Ultimately, all of these benefits are tied to the current state of affairs, as COVID-19 has significantly changed the CRE equation. Just a few months ago, it was a landlord’s market. But quarantines have forced landlords and tenants, very often with the assistance of tenant reps, to renegotiate leases to keep both sides of the table afloat.

Now that the economy is re-opening and utilization requirements have changed, tenants have more leverage as landlords compete to fill vacancies with reliable income streams.

Using a tenant advisor representative in South Florida

Tenants in South Florida are finding themselves in a unique position as they work to start new endeavors or save existing ones while navigating leases, re-opening phases, and the spike in new COVID-19 cases. The tenant advisory service at Morris Southeast Group can alleviate the stress of searching for the ideal space and negotiating lease terms, while helping businesses adapt to new requirements.

To learn more about what Morris Southeast Group can do for you now and in the future, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

COVID-19’s Impact on Businesses in Broward County

COVID-19’s Impact on Businesses in Broward County morrissegroup.com
Open sign in a small business shop after Covid-19 pandemic

A look at the business environment during the initial response to the pandemic

When Gov. Ron DeSantis issued statewide social distancing measures on April 1, it was done to head off predictions that Florida could follow New York’s lead in hospitalizations and deaths from COVID-19.

As we watched the Florida economy grind to a halt—particularly in the state’s southern counties, it seemed that we had somewhat dodged a viral bullet. This positive outcome has recently been overshadowed by quickly rising infections, with the state setting multiple records for new cases in late June and July.

While the initial lockdowns seemed to have worked initially and were less strict than certain states, businesses were severely impacted. With doors locked shut, workers furloughed, and some places filing for bankruptcy, the Greater Fort Lauderdale Alliance and Broward County issued a survey to gauge the pandemic’s economic impact. The research also strives to better understand the needs of businesses and identify opportunities to provide support.

A snapshot of the participants

Between April 20 (three weeks into the quarantine) and May 29 (nearly two weeks after Phase 1 of re-opening), the two groups began outreach to Broward businesses. Data collection resulted in 1,000 responses from businesses in all of Broward’s 61 counties, as well as 18 responses from Palm Beach, Miami-Dade, St. Lucie, Columbia, and Cook counties.

Of the responding businesses:

  • 22% are in the professional services sector
  • 8% are in the accommodation and food sector
  • 8% are in the healthcare sector
  • 8% are in the retail sector

In addition, the distribution of survey responses mirrored the county’s jobs distribution:

  • 17% in professional services
  • 12% in retail
  • 12% in education and health services
  • 9% in accommodation and food services

Key finding: operations and remote work

If there is any good news in the survey results, more than three-quarters of respondents (81%) said that their companies were open for business. Of these, 47% reported they were operating at regular hours and 34% at reduced hours.

Although 19% were not in operation during the studied period, it appears that remote work played a vital role in allowing many businesses to remain open. Sixty-six percent of respondents reported that either all (43%) or some (23%) of their employees were working remotely. Thirty-four percent indicated that they did not adopt this work option.

Key finding: Revenue, layoffs, and furloughs

This data gets to the economic heart of the matter—the bottom line for business and employees. Ninety percent of the respondents reported that the pandemic caused revenue losses, with 52% indicating their revenue had decreased by more than 75%. An additional 38% reported a decrease between 25% and 50%. Only 10% of businesses reported no revenue decrease (8%) or an increase (2%).

A closer look at job sectors provides an even clearer picture of the economic toll COVID-19 has taken on Broward businesses.

  • Not surprisingly, tourism took the greatest hit, reporting an average revenue loss of 87%. It was followed by life sciences (80%) and arts and culture (77%).
  • The financial sector reported the highest (31%) proportion of respondents with no revenue loss.
  • Wholesale trade (6%), manufacturing (5%), and healthcare (5%) were among the handful of job sectors that reported increased revenue.
  • 62% of respondents indicated that they did not lay off or furlough employees.

Key finding: Seeking assistance

The vast majority of companies (82%) applied for assistance through various federal and state programs. Although 241 respondents (18%) indicated they did not submit a single application for relief, the remaining companies (82%) applied for one or more stimulus sources.

  • The most well-known of the relief packages is the CARES Act PPP, the record-breaking stimulus package passed by Congress. According to the survey, 73% of the 545 applications for the program were successful.
  • In contrast, the Economic Injury Disaster Loan Program, administered through the Small Business Administration, had only a 39% successful application rate for 333 applications.
  • At the state level, the Small Business Emergency Bridge Loan Program had the lowest success rate—just 17% of 99 applications.

Where do we go from here?

In many ways, that’s the most difficult question to answer. While the survey presents a better picture of COVID-19’s initial impact on Broward’s economy, the situation remains unclear as caseloads rise. Nevertheless, the data does provide insight into what worked for businesses and what didn’t during the lockdown, and potential areas for improvement and government support.

This is a conversation that needs to happen immediately. As of this writing, Florida has sequential spikes in new cases, ongoing debates about mask-wearing mandates, and businesses closed and fined for failing to adhere to COVID-19 preventative guidelines.

Morris Southeast Group continues to monitor the economic impact of the pandemic. And we will update our clients, colleagues, and readers as events unfold.

If you have any questions about CRE investing or services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Millennials on the Move to the Suburbs?

The new downtown is often in suburbia

Leave it to the Millennials. Regardless of the misplaced blame that generation receives, there’s no denying that they have single-handedly changed the real estate landscape as much as Boomers have.

Consider the urban downtown landscape, a space that was transformed by a live/work/play lifestyle that embraces walkability and experiences. With Millennial needs and developer visions coming together, city block after city block filled with residential towers, galleries, cafes, and coffeehouses.

There comes a time, though, when every generation grows up, and priorities change. For a generation of Millennials on the cusp of middle age, those changes have meant children, skyrocketing rents, and the realization that cities may not provide all that’s necessary—things like detached homes, private yards, and good schools.

In other words, suburbia.

Not your parents’ suburbia

In many ways, Millennial desires closely mimic those of the Boomers, the generation that grew up in the first suburbs. This new generation, though, isn’t exactly interested in their parents’ or grandparents’ suburban experience, first made popular in places like Levittown, NY. Instead, they’re looking for suburbia with an urban twist.

For developers, this trend is significant. Studies indicate that Millennials will form two million households per year for the next ten years. In Jacksonville, Orlando, and Tampa, for example, Millennials are the number-one new-home purchasers. Similarly, Miami, Miami Beach, and Fort Lauderdale are in the top 10 Florida communities with the largest increase in Millennials since 2010.

The suburban resurgence & CRE

Just after World War II, when William Levitt devised his master plan for Levittown—“the prototypical American suburb”—one of its hallmarks was a town green. Located within easy walking distance to various neighborhoods, the spaces were reminiscent of the city neighborhoods from which new residents had come. They included greenery, a playground, and a strip mall with essential services, such as a laundromat and delicatessen. At some point, though, suburbs sprawled, and convenience felt farther away.

With the Millennial push for suburbia, developers are taking a look at the master plan for both new and established communities. Developers are examining how to create town centers that embrace the same live/work/play lifestyle that made city downtowns the place to be.

Desired tenants may include craft breweries, rooftop restaurants, cafes, retail, service businesses that present employment opportunities, shared workspaces, event venues, galleries, and pop-up opportunities to test market ideas. Another priority is businesses that provide Millennials ways to include their young families. A shared trait is that all of these areas should be easy to get to, and just as easy to get home from.

The COVID-19 connection

As with most things these days, there’s a pandemic factor. While COVID-19 isn’t responsible for the new interest in suburbia, it has certainly played a role in revving it up.

As metropolitan areas around the country were quarantined, wealthy residents fled the cities for their summer homes in the suburbs to escape contagion and claustrophobia. Many younger generations rented homes or moved back into the suburban houses in which they were raised. In the suburbs, it was simply easier to be socially distant and still get outside, even if that outside was a private yard.

Offices are also looking at the suburban landscape in response to COVID-19. CDC re-opening guidelines suggest employees commute alone and that businesses restrict the use of elevators—two concepts that don’t gel with working in an urban high-rise. For some companies, relocating to properties outside of the city center may make it easier to manage risk.

The new American Dream

It’s important to remember that this isn’t a one-size-fits-all American Dream. The span of Millennial ages runs from 24 to 40 years of age. That’s at least two to three different life stage brackets and an income span that’s just as wide.

While some Millennials may be looking in more affluent suburbs, others are opting for more affordable options. In either case, developers have been presented with an opportunity to look beyond metropolitan centers—and this may be one element of a post-COVID world.

To learn more about what Morris Southeast Group can do for you now and in the future, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

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