|Before you John Hancock that lease, beware of the many intricacies that come with it. Yesterday, we joined Mintz Levin real estate head Jeffrey Moerdler, who outlined some of the major issues to the New York State Society of CPAs’ real estate committee. One of the biggest challenges: accurately defining the measurement of space, he says. In New York, it’s customary to never mention SF in the lease doc, but the multiplier number (elsewhere, space is measured to BOMA standards). Throw in terms like usable, rentable, and carpetable square footage, plus measurement of space outside the premises (basement, equipment, and riser space), and things can get more confusing than bifurcation theory... or the Kardashians. In the end, it’s about looking at the total rent number and testing your fit with an architect, he says.
|Jeffrey with The Kaufman Org CFO Michael Giglio, The Quest Org prez Michael Rosenblatt, Schulman Wolfson and Abruzzo partner Harry Dublinsky and managing partner Norman Schulman, and Citi 1031 Exchange’s David Gorenberg. But even rent numbers come with challenges. Base rent is predictable, but additional rent isn’t.Errors are often made in rent escalations, he says, and usually because of a simple miscalculation—but escalations are a big profit center for landlords. Comb over the fine print—assignments and subletting have huge economic and business consequences to a tenant, particularly with “thou shalt not” provisions that constrain tenants’ rights (like “thou shalt not host a beach party with real sand and live sharks”... tenants need their rights). Recapturing is the ultimate protection for a landlord, while lease options like renewals, expansions, and right of first refusal only hinder them.