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Common Mistakes Commercial Tenants Make When Renewing Their Leases

9/27/2013

by Martin Griffin, Senior Vice President, Meany & Oliver Companies, Inc.

Media headlines about the Washington commercial real estate market and double-digit vacancy rates in the Rosslyn-Ballston Corridor and Crystal City have lulled many tenants into a false sense of security when it comes to renewing their leases. Many tenants expect their landlords to bend over backwards and offer the best deal possible with little-to-no effort from tenant. Unfortunately, many tenants find themselves in a position where they have little leverage at the end of their term. Below is an overview of common tenant mistakes at renewal time.

Waiting Until the Last Minute

One of the keys to negotiating a favorable lease renewal is to create leverage with your existing landlord. In order to do this, the owner must believe that you are willing to leave and have the time to move out without paying holdover penalties for your existing premises. Too often tenants approach an owner with only a month or two left on their existing lease and find themselves with few options. Your landlord knows it typically takes a tenant 6-9 months to find new space, negotiate a lease and have that spaced designed, permitted and constructed to meet a tenant’s needs (to be discussed in a future blog post). If you approach an owner a month or two prior to the end of the term, the owner will assume you do not have a back up site selected and will not be motivated to negotiate the best deal for the tenant.

Remember, Everything is Negotiable

When negotiating a renewal, tenants tend to focus on the rental rate with little regard for other items of economic value. A tenant may be able to secure a rent reduction to match rental rates in neighboring buildings but forget to reset the operating expense and real estate tax pass-throughs it is paying outside the base rent. This can easily add 10–20% to occupancy costs. This is also time to address any nagging issues with the tenant premises and building and premises. Is there a portion of the office that is either too cold or too hot, does the layout of your space need to be reconfigured, or do the bathrooms on the floor need renovation and updating? Now is the time to ask.

Rental Abatement

Rental abatement is another tool that can be used to improve the economics of the lease. Landlords typically budget a tenant improvement allowance for renewals in their building pro-formas. If the money isn’t spent, it is additional profit for the owner. Even if a tenant does not need work done to its premises, it should still request an improvement allowance and negotiate the option to convert it into rental abatement. This money can also be used to buy furniture, phone systems and other office equipment.

Not Touring the Market

Even if a tenant is 100% certain that it wants to remain in place, it helps to tour other options. The commercial real estate community is a relatively small community and your landlord is talking to other agents on a daily basis. Nothing motivates them more than hearing that you have toured the building next door from an outside source or seeing your firm’s name on a “tenants in the market” list that is traded among the real estate agents.

Hire a Commercial Real Estate Advisor

When negotiating a renewal, it also helps to have a qualified commercial real estate advisor on your side. The advisor will do most of the work and provide you with the guidance necessary to avoid the pitfalls of the renewal process and make sure you get the best deal possible. He or she will also create a sense of urgency with your owner, because he or she may find another option for your firm. Typically, the owner will pay your real estate advisor’s fee at no additional cost to you. These fees are already budgeted into the building pro-forma, and if there is no outside agent involved the money is additional profit for the Landlord. Why not use this money to your advantage?

With careful planning and advice, tenants can avoid these common mistakes when negotiating renewals and help reduce their organization’s occupancy costs.

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What is the Chamber of Commerce

9/19/2013

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And What is it Not?
by Cassie Bate, Member Services Administrator, Arlington Chamber of Commerce

The Arlington Chamber of Commerce is a 501(c)(6) nonprofit association of businesses and organizations serving the Arlington business community. As a member-based organization, the mission of the Arlington Chamber of Commerce is to strengthen businesses and the economic environment for those who work, live and do business in Arlington. We focus our efforts on business to business and business to community opportunities to accomplish this mission, including hosting more than 100 events a year, connecting business leaders to the community through our various committees, and more.

There are many things the Chamber is, but there are also a few things that it is not.

The Arlington Chamber is not…

1. The Arlington County Government

The Chamber is not a part of the local, state, or federal government. We work very closely with Arlington County, and many departments are members of the Chamber, however, we are not funded by tax dollars and we are not a branch of the County. I can’t tell you how many phone calls I get that end with the question, “Can you transfer me to the Arlington County [fill in the blank] Department?” I am always happy to look up the correct number, but it is important for people to understand that we are not part of the government, and therefore cannot directly transfer anyone to their offices.

2. A Tourism Organization

While I think working in tourism would be an awesome job, I was never trained for it. The Chamber staff lives and works in Arlington and we fully support the tourism industry. Many hotels are members and we recently partnered with Arlington Economic Development to fight for the Transient Occupancy Tax for Arlington hotels. However, we are not a visitor center, and I cannot tell you which hotels have free parking or compare rates for hotels. For information on visiting Arlington go to www.StayArlington.com. We also do not work for the Metro. For information on transportation, visit www.WMATA.com.

3. A Resident Information Center

We get a lot of calls and emails from people looking to relocate to Arlington County. The more the merrier! While the Chamber offers Relocation Packets, upon request, to individuals looking to move to the area, we are not the authority on apartments, real estate, setting up utilities, property taxes, or other information pertinent to new residents. For information about moving to Arlington, visit www.ArlingtonVA.us.

While there are a few misconceptions about what the Chamber does, our main focus is centered on the Arlington business community. We receive a variety of phone calls every day and try to help to the best of our ability. If we don’t know the answer, we will direct you to someone who does. If you would like to search for local businesses, please visit our Business Directory. I am always available to answer and questions you may have about Chamber membership or the business community: chamber@arlingtonchamber.org, 703-525-2400.

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Dress for Success: The Men's Guide to Business Attire

9/12/2013

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By Sharla Bachrodt, Independent Style Consultant, J. Hilburn Men’s Clothier

Fall is the time of year when many professional men evaluate their wardrobes and update them with new pieces. When doing this, think about three things; your company’s dress code, the pieces you already have in your closet, and your personal style.

Let’s look at dress codes first and what they mean.

Business Dress – You still need to wear a suit, guys. It should be dark but can have a subtle pattern. Your shirt should be light colored but again, a pattern is ok. A tie is expected. Shoes and belt should be tasteful and match each other’s color closely.
Business Casual – This implies that a tie is optional. A sweater or vest might replace a jacket. Your shirt should still have a collar and your trousers should be dressy. Add any leather dress shoe and you’re good to go.
Casual – If your company states “casual attire” or “casual Friday” it means you’re still expected to present yourself well. No, you can’t wear your ratty shorts, t-shirts or sneakers. Save those for your yard work. Jeans are ok but remember that darker washes have a dressier look than faded ones. Five-pocket pants, polos or golf shirts are acceptable. Shoes should be moccasins, boat shoes, or similar.

Always consider what’s standard in your industry and your specific company. A small business owner will dress differently than a litigation attorney, who will dress differently than a teaching professional. If in doubt about which of these is appropriate, aim to dress at a level above the perceived minimum expectation. Your colleagues will be more likely to view you as someone who is “going places.”

Now examine what’s in your closet.

First, keep in mind where your company falls within the above guidelines. Then rule out anything with obvious signs of wear or staining. If you have multiple wardrobes based on seasonal weight gain or loss, don’t wear those items when they’re too loose or too tight. A suit that’s too large looks like you’re playing dress-up in Dad’s clothes, and tight clothing is never acceptable. Ever.

Now that we’ve pared it down to what’s workable, look to see what you have in solids and patterns for suits, trousers, sport coats, and shirts. Writing them down may help you to work out a plan. Create a column for each type of garment and write down the color/pattern of each. Then you can see which pieces you already have that complement each other, as well as what you may need to purchase.

The rule of thumb for a business dress wardrobe is to have a minimum of five suits (navy, grey, navy stripe, grey stripe, glen plaid). A navy blazer and several trousers are a versatile supplement to your suits, if deemed appropriate by your employer. Plan on 14 shirts in various fabrics, especially if half of them are at the cleaners on a regular basis. Ideally, you should have two ties for every suit or sport coat. Round this out with dress shoes and matching belts in black, brown and English tan. Less formal wardrobes may require sweaters or vests for layering, and don’t forget to have a warm coat and scarf available for extreme temperatures.

Finally, consider your personal style.

If you lean to the conservative side, you may not feel comfortable or confident in bold plaids or checks. Or if you like to push the envelope a bit, you’ll likely feel “blah” in a solid blue or gray suit with a plain white shirt. Study your closet to see where there are trends in what you’ve previously purchased. This will give you clues about your comfort level. If you want to venture outside your comfort zone, do so gradually so you don’t spend money needlessly on something that you won’t wear because it feels too extreme.

Ready, Set, Go!

Now you’re ready to complete your wardrobe for the upcoming cooler season. Knowing what your dress code means will help you avoid potentially embarrassing mistakes. Remember, too, that properly fitting clothing increases your comfort level and your self-confidence. Looking sharp means feeling sharp!

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Facts About Tax Audits

9/5/2013

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Audit Worries Shouldn’t Keep Taxpayers from Taking Valid Tax Breaks
by John Gibson, District Manager, H&R Block

The federal government estimates it has a $450 billion tax gap (the amount the IRS estimates is missed in tax collections). One way the government tries to close that gap is through IRS audits of those suspected of having underpaid.

In 2011, 7.4 percent of taxpayers were contacted by the IRS about their returns, and the IRS collected $15 billion from audits.H&R Block (NYSE: HRB) advises that even with an atmosphere that includes more people being audited, taxpayers shouldn’t be afraid to claim all the tax breaks to which they are entitled.

Who is being audited and why?

The profile of a potential audit candidate has shifted from the rich to include people who make far more modest incomes. Of the more than 1.5 million audits conducted in 2011, 2 in 3 were of people who made $50,000 or less. Following are some common reasons the IRS contacts taxpayers:

Unreported income, inconsistencies – the surest way to get a letter from the IRS is to not report all income
- A document-matching program makes it easy for the IRS to check income reported on tax returns against what is reported by employers, banks, brokers, etc.
- The IRS also compares deductions taken by taxpayers in the same income bracket to find inconsistencies in areas including mileage and charitable donations
Claims for expenses not allowable and a majority of cash business self-reported transactions on the Schedule C
- Eligible expenses can include advertising, insurance, legal services, vehicle expenses, employee wages and taxes, home office expenses and depreciation.

What should a taxpayer do when contacted by the IRS?

While tax season is January through mid-April, audits are conducted year round. The IRS may contact a taxpayer as late as three years from the filing date. However, contact may be very soon after the return is filed if an item is flagged for some reason.

Taxpayers who get an audit notice in the mail should contact their tax professional immediately as delays could result in additional penalties and fees. Most audits are correspondence audits conducted via mail; resolving the matter may be as simple as sending supporting documentation to the IRS. In any case, it is important to respond to the notice promptly. If a face-to-face meeting is required, some taxpayers may elect to have their representative attend without them. In the end, if the taxpayer disagrees with the auditor’s findings, the results of the audit may be appealed. membership, opportunities, small business, blog, business resources, content marketing,networking

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ChAmber Blog

Common Mistakes Commercial Tenants Make When Renewing Their Leases

What is the Chamber of Commerce

Dress for Success: The Men's Guide to Business Attire﻿

Facts About Tax Audits﻿

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Dress for Success: The Men's Guide to Business Attire

Facts About Tax Audits