5 Best Practices to Build a Real Estate-Driven Multi-Unit Company
In the landscape of multi-unit businesses, real estate should be more than just a supporting player – it should be woven into the very fabric of your organization's decision-making process. Real estate acts as the vital thread connecting all activities beneath the real estate umbrella to your management's overarching goals. In essence, it becomes the primary tool for achieving your company's mission.
The real estate umbrella encompasses seven critical elements:
- Site Selection
- New Site Lease Negotiations
- Lease Renewals or Renewal Negotiations
- Lease Administration and Date Tracking
- Lease Audit Reviews of Landlord Billings
- Lease Cost Recoveries on Incorrect Landlord Charges
With these seven facets underpinning your real estate strategy, let's delve into the five best practices that are the cornerstones of constructing a real estate-driven multi-unit company:
- Contingencies: Always be prepared with contingencies for various scenarios. These include site approval, due diligence, title review, permits, patio arrangements, and liquor licenses. Having these contingencies in place minimizes surprises and ensures smoother processes.
- Common Areas: Maintain the status quo in common areas to protect access and visibility to your premises. This means avoiding changes that could hinder your day-to-day operations. Ensure parking ratios meet code requirements and don't permit changes to tenant-protected areas. Landlords should also make commercially reasonable efforts to minimize any disruptions to your business.
- Renewal Options: Streamline the process for lease renewal options. Minimize pre-conditions for tenants to exercise these options, keeping it as straightforward as possible. Tenants should ideally not be in default beyond notice and cure when exercising their options. Only consider changes to the base rent, if necessary, and ensure there's a carefully negotiated process for determining market rent. Never commit to option renewals before rent terms are finalized, and provide for dispute resolution mechanisms in case of disagreements.
- Real Estate Leadership: Assign someone within your organization to set real estate policies. These policies should cover crucial aspects like lease terms, guarantees, exclusivity clauses, early termination provisions, and Tenant Improvement Allowances. Having a dedicated individual or team responsible for these policies ensures consistency and alignment with your overall objectives.
- Lease Administration: Consider outsourcing your lease administration responsibilities to a third-party provider with expertise and software solutions. This strategic move not only frees up valuable staff time but also keeps your back office lean and efficient. Thoroughly abstract your leases and ensure they are in the hands of experts. When leases are abstracted properly and in the hands of experts, like Property Works, you can handle every item on the real estate umbrella more efficiently. Lease data touches real estate, accounting, legal, and facilities departments. When lease administration is outsourced, you avoid data silos and disjointed departments, fostering seamless communication and data-sharing across your organization.
The journey to becoming a real estate-driven multi-unit company starts with these best practices. It's a path paved with efficiency, cost savings, and strategic growth. So, embrace real estate as the driving force it can be and watch your organization flourish.