By Angelo Beacon-Paglia
Property Overview
The property located at 401 E Atlantic Ave. offered a prime 2,100 SF office space right in the heart of downtown Delray Beach, Florida. Its strategic location on one of the best intersections in the area made it an ideal space for attracting foot traffic. Negotiations for the office space commenced in mid-May and were successfully completed on July 1.
Client and Requirements
The client was Citizens Community Realty, a real estate firm based in Connecticut. Citizens Community Realty sought an office space with excellent foot traffic to attract potential real estate agents to join their team. Being located within a block of the main street in downtown Delray was a critical requirement for their success.
Challenges and Solutions
The main challenges encountered during the deal were the high occupancy costs and the limited supply of available office spaces in the market. Despite the shortage of inventory, our agent managed to source an off-market for-sale-by-owner (FSBO) property. Initially overpriced, negotiations led to a significant reduction of almost $1000/month, along with securing a 2-month rent abatement, making the deal feasible for the client. Additionally, disagreements arose during the negotiations regarding certain terms of the modified gross lease, particularly related to year-over-year property tax increases and HVAC replacement responsibility. The team successfully negotiated a cap of 1.5% for year-over-year property tax increases, mitigating future cost escalations. To address the HVAC issue, a compromise was reached, with the tenant being responsible for the regular services while the landlord took care of the unit’s replacement, considering it was a short-term lease.
Deal Structure and Financial Considerations
The transaction type for this listing was a modified gross lease initially starting at $6,500/month, but after our negotiation efforts, it led to a final agreement of $5,750/month with 2 months of rent abatement.
Marketing and Negotiation
The success of this deal was largely attributed to boots-on-the-ground efforts as the property was not listed online. The team leveraged its expertise and emphasized having alternative options under consideration. Setting clear budgetary expectations proved instrumental in securing a deal that satisfied both parties.
Key Success Factors
- Clear Communication: Effective communication played a crucial role in addressing potential issues and resolving them swiftly.
- Swift Action: By being proactive and decisive, the team capitalized on the opportunity presented by the off-market deal.
- Setting Expectations: The team set realistic expectations during negotiations, ensuring a balanced and satisfactory agreement.
Unique and Innovative Approaches
The sourcing of an off-market deal was a unique and innovative approach that enabled the client to secure the ideal office space promptly.
Results and Impact
The deal culminated in the signing of a lease for the office space, providing Citizens Community Realty with the perfect location for their new office in Delray Beach, Florida.
Lessons Learned
From this experience, the team gained valuable insights into the importance of understanding both the tenant and landlord’s needs. Clear and effective communication was essential in addressing potential issues, and reaching mutually beneficial agreements.
Future Strategies
In future deals, the team plans to ask more questions upfront to anticipate specific terms that may appear in a lease, thus better preparing tenants before the negotiation process begins. This proactive approach will lead to smoother negotiations and ultimately foster successful outcomes.
Testimonial
“Angelo did a great job in finding me a great location and negotiating a fantastic rent with the landlord in Delray Beach. Prior to Ângelo I was quite frustrated for several months as the prior agents simply didn’t know the market as well as Angelo did. I would certainly recommend Angelo for your commercial needs and will go to him on other commercial deals.” – Aitor Deurquiza
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