I will discuss some of the reasons why options to terminate are desirable, their common types and structures, and analyze their use in commercial real estate transactions. Lease termination options can be negotiated into some lease agreements under certain conditions. Perhaps more than any other option right, in order to successfully negotiate a lease termination option to terminate the party desiring the right must have an awareness of the negative implications for the other party, and a willingness to provide reasonable solutions to address those implications if required.

This post reviews why lease term matters in commercial real estate leases and how variance in lease term will impact common real estate metrics.

There is an art in negotiating a lease in the best interests of your company or customer. As commercial real estate professionals, in order to create great work, we need to be armed with the right tools to understand the operational and financial aspects of the agreements to which we are binding our company or customer.

Since risk is the probability of a negative result, evaluating and reducing risk is the way to reach the most important objectives in industrial real estate transactions. In general, a mindset which prioritizes risk avoidance is one that maintains company purpose, relationships, and leads to the best results overall.

If you were to choose the most important objective of any industrial real estate transaction, what would it be? Spectacular savings compared to market? Getting acceptance on all the important legal terms? Above market tenant improvement allowance? Operations is happy with the property condition? On-time occupancy?

Corporate real estate has developed distinct service categories to meet the real estate needs of business units and organize talent by skill sets. These services often work closely with each other. Portfolio administration continuously interacts with transaction management, facilities management and legal. Facilities management can frequently work with project management and space planning, or assume their functions within the facilities management department.

The selection and hiring of a market broker to represent a client as a fiduciary is one of the most significant responsibilities of a corporate real estate account manager. A market broker is typically an expert in a given geographic market or vertical, such as cold storage or truck terminals, while the corporate real estate account manager oversees the overall real estate services to the client.

One of the main areas I recommend industrial occupiers pay close attention to in lease negotiations are the responsibilities of who maintains, repairs, and replaces building systems and components under a lease.

The selection, construction, and use of transaction documents is an important part of negotiating any commercial real estate transaction. Transaction documents define the parties to the transaction, the business terms to be agreed upon, and the time frame in which the parties can agree. They create the playing field for the negotiation to take place.

The dimensions of a building can determine if a distribution operation is moving goods profitably, a manufacturing operation produces product efficiently, and a warehouse operation stores product effectively. For these reasons, supply chain real estate practitioners should be aware of how their company or client's operation translates into an ideal building layout for any new real estate search or re-design of current facilities.

In this post I cover the basics of cold storage from someone who represents companies looking for cold storage. I review the cold storage features most commonly of interest to cold storage users and property owners when they evaluate cold storage facilities.

On June 22nd the Journal of Commerce (JOC) published an article titled "Long-awaited US inventory drawdown spotted" where they state in the first sentence, "Lower US inventories would be a boon from coastal ports to heartland highways". The notable exception to such a boon, as they cite in the next paragraph of the article, is in warehousing demand. If US inventories are reduced we would expect warehouse demand to be reduced as well. However, economic indicators do not support such a drawdown at this time.

Advancements in technology are disrupting the function and design of industrial real estate. Since these advancements are believed to be exponential, perhaps to an extent, the industrial real estate of tomorrow promises to be very different than today. Technologies such as autonomous vehicles, 3D printing, robotics, and the internet of things (IoT) exist and will disrupt industrial real estate and supply chain. However, with exponential advancements in technology disruption the future of industrial real estate is very likely to be disrupted by new technological silos which do not exist today.

The primary objective of the supply chain real estate professional is to align their real estate portfolio with their company's objectives. Alignment of real estate and overall business targets can be a complex process involving a wide variety of corporate stakeholders, including corporate finance, operations, and capital markets. This process can often be reduced to balancing efforts to reduce expenses and drive revenue.

Lighting is a critical component of today's supply chain real estate. The use of light, whether artificial or natural, affects the costs, labor, compliance and environmental elements of an industrial operation. Therefore, facility decision makers and designers should have a keen awareness of how light is employed in their facilities.

We found that the bay and column spacing within a warehouse can have a significant impact on key performance indicators (KPIs) for warehouse occupiers in ways that are not always obvious. In this post I discuss bays and column spacing in a warehouse and why they are important for supply chain real estate participants to consider when a) designing a new warehouse location and/or b) perhaps re-designing an existing warehouse.

…fire sprinkler systems have evolved from little more than a perforated pipe to a highly technical engineered system capable of extinguishing the most combustible materials capable of being stored. Since fire codes and fire systems require professional interpretation and expertise, it is imperative that supply chain companies work with experts to mitigate any risk to their desired storage plans.

Assuming the acre is functional in shape, meaning closer to a square than a bowling alley, estimates typically range from 34-40 trailers per acre with no truck cab.

The second point to make is that as the land increases in size, the number of trailers that can typically be stored per acre goes up. For example, my team is marketing an 8 acre land parcel and a space engineering firm created a layout with 394 trailer parking spots for a total of 49 trailers per acre, with 23 trailers spots double stacked.

Flat truck yards may not be high on the occupiers wish list for their new industrial space, but its inclusion may save them time and money over their occupancy.  Flat truck yards are actually truck yards without the typical gradual slope towards the building's loading docks.  Instead, the truck yards are sloped away from the building.

For most experts, all KPIs are metrics but not all metrics are KPIs.  In order for a metric to be a KPI it must measure how well a company is meeting its objectives.  For example, a metric measuring cost of inventory in transit would be a KPI to a company trying to reduce their inventory holding costs.