Meet Michael Johnson: computer expert and video gamer extraordinaire.
His friends call him Mike. Mike’s parents always desired the best
for their son, though they didn’t have the means to put him in the best
schools. His father could trace their family tree to the pre-American
Revolution, and his mother was a second-generation American of
Hispanic descent. Mike grew up in a loving home with trips to Grandma’s
house on Sundays after church. The middle child of three siblings, his
father was a conservative Republican and blue-collar worker having
spent over thirty years at the same company. His mother was a school
teacher (Mike’s third-grade teacher) and a concerned Democrat, so
Mike learned to charter his course. When he was young, Mike spent far
too many hours with his friends around his video game console, though
it never impacted his grades. He was a model student.
Mike turned his passion and hobby into a college scholarship and an
internship at a local tech company (there’s hope parents). He graduated
college at the top of his class in under three years with a double major
in computer science and software engineering. His dedication to his
studies and talent set him apart, and he quickly received job offers from
several software companies. Mike accepted a starting position at a new
start-up tech company that seemed to fit his enthusiasm and growth
Good decision. Within a few years, Mike was promoted to Software
Engineer revolutionizing the company’s software development division.
He had a boisterous, outgoing, and positive disposition; he was a natural
leader. He quickly advanced to the head of the software engineering
division which saw profits soar 20 percent per year since Mike started a
few years earlier. Other larger tech companies noted his successes.
An executive recruiter reached out to Mike with an unbelievable
opportunity for a director position at a leading software development
company. The interview couldn’t have gone any better, and the company
hired him on the spot. Director of Software Engineering at the software
company was Mike’s dream job, and at age twenty-seven with a six-figure
salary and stock options, he was well on his way to climbing the corporate
ladder. His division quickly expanded and dominated its share of
the company’s profits.
By the end of his third year at the software company, Mike was offered
the recently vacated position of company president. At age thirty
and recently married, he was in charge of one of the fastest growing and
trendiest software companies in his hometown. Mike left his ordinary
cube and moved to the coveted corner office. Through the glass walls, he
could observe the many code programmers and engineers which worked
in cohesive groups and was available to all the teams.
After a grueling prep meeting for a presentation to the board the
next week, Mike returned to his office. Sitting down at his desk, Mike
grabbed a notepad to review the to-do list he had jotted down earlier that
morning. “Not too much progress,” he thought. As he was bemoaning the
thought of another day with unfinished business, he noticed a blinking
red light on his phone indicating he had a voice message. In fact, he had
five voice messages:
-- Message one: “Mr. Johnson, congratulations on your promotion.
I am Kasey with a national real estate company. You’ve probably
noticed our signs everywhere. I’m calling about your pending
lease expiration. I’d like to come by your office for a brief meeting
to discuss the market and how great we are. Please call me.”
-- Message two: “Michael, hello. I’m “Lucky” Tom, a tenant representative
for a global real estate group. Our integrated platform
is huge. We even have offices in China. As your lease expires
in twelve months, I’d like to pitch for your business. Together
we can make your company great again. We have lots of pretty
charts and flyers. Trust me; they’re fantastic. Call me.”
-- Message three: “Mr. Johnson, my name is Ms. Carter, and I
work with a tenant representation company. We only represent
tenants such as yourself and no landlords. We have no conflicts,
nope, not one, nada—we are not conflicted. Your lease is set to
expire soon, and I’d like to show you all the subleases I have in
the market. Did I mention, we have no conflicts? None. Please
-- Message four: “Michael, I am Bob, the Closer, of Bob the Closer
Real Estate Company, and the President of Bob the Closer Real
Estate Company. I can save you money. Your landlord is charging
thirty dollars per square foot, but I can get you a twenty dollar
rate and a hefty TI package. Call me now to save your job. Bob,
the Closer of Bob the Closer Real Estate Company, and uh, I am
-- Message five: “Mr. Johnston, I am Jason Woods with a local real
estate company. I recently represented a tenant in your property
and would tell you all about the deal, but I signed a confidentiality
agreement, so I can’t. I can help you with your lease expiration.
Please call me at your convenience.”
Well, at least four of the five got my name right, thought Mike. As he
finished listening to the five messages, he noticed another call came in
that went straight to voice mail.
-- Message six: “Listen, Michael, what’s the matter? Don’t you want
to save money on your lease? It’s Bob, the Closer of Bob the
Closer Real Estate Company, and it’s been one hour since I left
you a message. I will call you every hour of each day until you
call me back. Don’t be a loser, call me back.”
What is going on? Who are these people, and how do they know my
lease expires in twelve months? I don’t even know when my lease expires,
wondered Mike placing the phone down and hoping for no more calls.
Unfortunately, after much diligence, Mike confirmed the software
company’s full floor lease does expire in twelve months. Much to his
aggravation, brokers, especially Bob, the Closer, continued to pepper
him with daily calls looking for business. The constant solicitations kept
the lease expiration at the forefront of Mike’s mind. What am I going to
do about the lease?
One week later, the leasing agent for the landlord of the property,
Tony Di Proprietario, invited Mike out to lunch and Mike accepted.
After the customary congratulatory comments and small talk, Tony put
him on the spot. Taking his notepad that had been resting on the corner
of the table covered with a white tablecloth, the leasing agent smiled in
between bites of his salad, “So, now that the lease is set to run out within
twelve months, have you given any thought to your renewal?”
“Before you answer, let me tell you about all the planned improvements
at the property,” continued Tony. “As you know, the building sold
recently, and the new landlord is investing a lot of money in renovations
which will transform our property from a Class B building to a Class A
building.” As the waiter refreshed their water, Tony explained, in tremendous
detail, how new marble floors in the lobby, the planned conference
center, and gym facility would all increase the value of the property.
“Wow, that’s uh, that’s—that’s well and good,” interjected Mike, as
he buttered a piece of bread. He was noticeably uncomfortable with the
discussion not really sure what a Class B or Class A building meant.
Tony didn’t pick up on Mike’s body language but zeroed in on Mike’s
words, “well and good.”
“Do you still need the same rentable square feet or will you need
more space—which is okay, because we have an excellent common area
factor and our parking ratio can handle any expansion,” continued Tony.
“We are also considering switching from a full-service lease to an NNN
lease. But don’t worry, we’ll make sure the operating expenses stay relatively
the same as your base year.”
At this point, all Mike could muster was a simple nod as he tried
to make sense of the dialogue and enjoy his pasta dish that had finally
Tony was on a roll. “I have a lot of activity on the vacant spaces in
the building, and I’m about ready to forward you a ROFO Notice on the
available space below your office. Oh, could you pass the salt please?”
The last request was about all Mike understood, and he quickly obliged.
Tony proceeded, “Thanks. So, you can appreciate the landlord would
like to know if you plan on exercising your option to renew, the notice is
due next month. Keep in mind if you need TI we’re happy to accommodate
although your option language doesn’t include a TIA.”
Tony suddenly and awkwardly leaned forward, looked around the
restaurant, and whispered, “I’ll be sure to get you a good deal” as his tie
nearly landed on Mike’s meatball.
Mike wished he had a translator to explain the foreign language the
leasing agent appeared to be speaking. Class A, rentable square feet, common
area factor, parking ratio, full-service, NNN, base year, ROFO Notice,
TI, TIA, option to renew, etc. What did this all signify? Mike stopped
eating with half the pasta still on his dish (and a meatball); somehow,
he had lost his appetite. He commented to the leasing agent, “All good
questions to consider, Tony.” He then answered the way many decision
makers answer when caught off guard; he appealed to a higher authority:
“I’ll need to speak to my executive committee and report back to you.”
“No problem,” responded the leasing agent as he pored over the dessert
menu, “I’ll prepare an LOI for your review, and I am happy to send it
to your tenant advisor. Who is your tenant advisor?” asked Tony as the
waiter approached the table to remove the lunch plates.
“Would you care for some coffee?” asked the waiter.
Just then, Mike’s cell phone rang. At last, a break in this tiresome discourse,
he thought. “Excuse me; I must take this call.”
Grabbing his cell phone, he stepped outside the restaurant, and answered
the call, “Hi, this is Mike Johnson.”
“Fantastic. Mike, this is the best day of your life. It’s Bob, the Closer,
of Bob the Closer Real Estate Company.”
Have you ever been in Mike’s shoes? Have you ever been Bob the
closered by real estate agents cold calling you daily for business? Has a
Tony, the leasing agent, at any point pressed you for a renewal? Mike’s
story is quite common.
If you own a business or are a decision maker, regardless of the size of
your company, you will eventually sign a commercial lease (if you haven’t
already). Rent is often the second highest expense for the business community,
second only to payroll. But just as a good employee contributes
mightily to the profitability of a firm, a well-negotiated lease will likewise
promote the company’s values, morale, and profit margins.
Don’t Sign the Lease! The Tale of a Triumphant Business Owner is comprised
of two parts. In part one, we explore the journey of Mike Johnson,
a fictional businessman who is a typical “OBO,” an Overwhelmed
Business Owner, and follow his transformation to a “TBO,” a Triumphant
Business Owner. I’ll define these terms shortly. In Mike’s story, we’ll
answer ten common questions every business owner must know and
understand before signing a lease document. In part two, we’ll discover
seven frequent mistakes business owners commit regarding lease agreements
and how to avoid these costly mistakes. I’ve spent much time in
my career representing landlords as a leasing agent. I’ve been behind
the curtain. I know how they think, what drives them, what’s important
to them, and most importantly, the errors tenants unknowingly make
when signing a lease.
Excerpted from "Don't Sign the Lease! - The Tale of a Triumphant Business Owner" by Jorge L. Morales. Copyright © 0 by Jorge L. Morales. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.