Commercial Real Estate Strategy Tips

An “Out-Of-The-Box” Leasing Idea

by Marvin Levin

My colleague, Jeanne Devenport, was winding up a lease on an industrial building in Fremont. Her broker brought her an ideal tenant from Hayward who wanted the space because it had highway visibility. The owner and the prospective tenant had executed a non-binding letter of intent. However, as the prospect was about to execute the lease, he checked the Yellow Pages and discovered that he had just missed the deadline for advertising in the new Fremont Yellow Pages book. So, he decided to extend his lease in Hayward, pass on the Fremont space, and to defer his move.

Before reading further, you might ask what you would do in this situation.

Jeanne had a couple of ideas, and they were enough to make the deal.

The first was that the prospective tenant obtain a call-forwarding service from the Hayward exchange so that for the nine or ten months after his move to Fremont, anyone calling his Hayward number would be forwarded to Fremont.

The second had to do with the question of whether the better highway visibility in the Fremont space would more than compensate for the possible initial loss of business resulting from the relocation. We were sure that it would compensate, and the prospective tenant (somewhat defensively) said he was not sure about it.

So, we proposed a combination of base rent and percentage rent. The base rent protected the tenant if he was right, and the percentage rent compensated us if we were right!      

We really like challenging rental situations, so if you know of a building which is so challenged, please contact me.