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Ask the Expert

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Is it time to renegotiate?

First of three North L.A. Commercial and Investment Real Estate forum focuses on commercial lease is

Posted: September 5, 2012 2:00 a.m.
Updated: September 5, 2012 2:00 a.m.

Bob Khalsa, president of United American Realty, speaks at North Los Angeles Commercial and Investment Real Estate forum held in Stevenson Ranch on Thursday.

 

When your commercial lease is up for a renewal, don’t just put your John Hancock down before evaluating whether you should try to renegotiate.

There are various parts of a commercial lease that could be renegotiated, said Bob Khalsa, president and broker of United America Realty, at Thursday’s North Los Angeles Commercial and Investment Real Estate forum.

“It’s not just, ‘What is my rent?’” Khalsa told the group. “There are a lot of things you can check.”

About 35 residential and commercial agents and investors attended the forum hosted by the Santa Clarita Valley Division of Southland Regional Association of Realtors.

Khalsa outlined the other aspects of a commercial lease, including the use of common areas in the complex, additional rent and percentage rent, parking, and tenant improvements.

A tenant needs to consider what strengths they have in their favor that can make renegotiating a lease more successful. For example, a tenant has leverage if his company or business has become the local marker when it comes to giving directions (“Make a left at the Jack in the Box”).

However, a tenant needs to weigh the consequences of deciding to move because a landlord refuses to renegotiate sufficiently for you. A move requires expenses, changing business cards, advertising the move, and generally rebranding the company’s location.

Before Khalsa spoke, two experts presented in the first portion of two separate three-part series. Dino Champagne, the Greater Los Angeles division manager for Asset Preservation Inc., talked about the 1031 tax-deferred exchange process. Dennis Dishaw, president of ACI Capital, talked about apartment loans in the first part of his series on commercial lending.

All three speakers had one common message: It’s important that you involve all relevant parties, be it the investor, buyer, seller, attorney or tax expert, when conducting any of the discussed actions — and involve them early, before issues arise.

“Don’t fly solo,” Khalsa said.

The second and third parts of the two series will be presented on Sept. 27 and Oct. 25 at the IHOP on 24737 Pico Canyon Rd., Stevenson Ranch, CA 91381

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