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FOR SALE: The Heart of Downtown Atlanta

Downtown Atlanta is shaking some trees

I heard about the sale of the CNN Center last night and I cannot stop thinking about it!  The CNN Center, located in Atlanta, Georgia, is the headquarters for CNN and other WarnerMedia companies around the world. WarnerMedia, deeply rooted in the Atlanta culture, made the bold decision to sell the CNN Center and relocate operations to its newly renovated Techwood center. The change will not be immediate, and employees will remain at their present location for quite some time. This makes sense considering WarnerMedia unveiled a commissioned mural portrait of Turner at the building park late last year.

WarnerMedia plans to sell and lease back the CNN Center for at least five years in an effort to raise capital.  Desroches has been working for some time to determine the highest and best use of the CNN Center and, he and his team, have ultimately decided the best course of action is to sell.  Furthermore, many of CNN’s most popular, have moved to New York City.

 

Only time will tell…

Opened as the Omni Complex in 1976, the CNN Center has been a tourist attraction for decades, providing behind-the-scenes tours that allow an inside look at how live broadcasts are created and transmitted globally. CNN has occupied this building since 1987, when Ted Turner moved the network from the original Techwood campus. The center featured the Omni Hotel and a large food court and gift shop.  On May 29th, protests over George Floyd’s death at the hands of police turned violent, resulting in damage to the exterior of the building and some part of the interior. The famous CNN sign, located at one of the main entrances, was damaged too but was fixed the next day.

It may seem that the protests sparked the decision to sell, and although the announcement was made only one month after the initial damage, that’s not the case. The decision to sell the property was made to cut costs has been in the works for years.  The plan was set in motion after AT&T purchased Time Warner. Perhaps rioting and disruptions were unpleasant catalysts setting the plans into immediate action, or it was initially been projected for this time frame. Pascal Desroches, CFO of WarnerMedia, suggests that the existing CNN Center could be repurposed from an office building to have more emphasis on retail and mixed-use.  That could be an amazing addition to the downtown submarket.

Over its 30+ year presence in Atlanta, the CNN Center has had a major impact on the city.  Just a few years ago, in honor of the founder, the road that runs in front of the building was renamed “Ted Turner”. While they aren’t turning their back on the city, the move will displace a significant number of WarnerMedia’s 6,000 Atlanta personnel.  Because of the ongoing pandemic, we probably won’t see the effects of the relocation for quite a while. Who knows?  The move may very well be for Atlanta’s benefit.  Only time will tell.

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Renewing Your Lease? Consider This First!

Need to Renew?

 

Renewing a lease can be a pretty overwhelming and complex situation for corporate tenants who are accustomed to simply doing their job and not worrying about real estate.  While that’s tough, it’s also a way to learn what the current market is doing and how the current position of your business can determine whether you can negotiate better lease terms moving forward.

When you truly understand your options during a lease renewal negotiation, you can be a force to be reckoned with.  A tenant representation broker will arm you with market knowledge that you may not otherwise be privy to, help you to negotiate a lower rate, acquire additional amenities, and secure  the best deal possible for your business.

Read on to find out more way you can ensure a good deal for your business as well as how you can protect your future commercial real estate ventures.

 

Negotiate Early…It Only Makes Sense

 

When considering a commercial real estate lease renewal, it is always best to be proactive. Evaluate your situation, determine what is and is not working for your business, and communicate with your landlord 9-12 months before your lease agreement expires. Your landlord will consider these points while reviewing your renewal and will be well aware that time is on your side – time for you to look for a new space if your concerns are not fairly considered.

In the event that you don’t have time, I’ve got you covered.  What I just described is the best-case scenario, however, I have closed Class A office space deals within the span of a business week so I know it can be done.  If you have a tenant representation broker who is “Johhny on the spot” and is as “quick as lightning”, then you’ve got a great teammate fighting for you.  That kind of broker will alert the landlord upfront that “time is of the essence” and the deal needs to close fast.  If the landlord is on board, you’ve got a great situation in front of you and even greater representation behind you.

 

What’s Going On With Your Current Space?

 

Before making any sudden decisions, take the time to analyze how your business is performing in its current commercial space. This is an opportunity to determine if the space is still suitable for your company and its future growth. Items to consider are location, amenities for employees, office configurations, and tech-enabled infrastructure. These can all serve as discussion points in the negotiation of your renewal. There is a possibility that your current landlord may incur these costs if it means keeping your company as a tenant.  When you determine these factors, you can really increase your market knowledge which will facilitate an opportunity for you to have more leverage in negotiation.

 

Understand the Market Conditions

 

The commercial real estate market is dynamic, resulting in continuous changes year after year. It is important to be up-to-date on the current state of the market when looking to sign a new commercial lease or renew your current lease. Look at the market around you; are the rents similar to what you are currently paying for space? Are there other properties that offer additional benefits? Having this knowledge gives you the ability to be well informed while negotiating your current lease. If there is the potential to have some of these added benefits, lease renewal is the time to present them to your landlord.

Once you are more knowledgeable about the current market conditions, ask your tenant representative to negotiate an option or two for you.  The market changes every year so it would best serve you to lock in a good rate for as long as you can.  If it costs too many dollars for the same thing you had last year, it doesn’t make sense.  Don’t you agree?

 

Research Alternative Options

 

Even if you are comfortable in your current commercial space, it is always beneficial to educate yourself on other buildings and owners in the market. You may determine an opportunity that is a better fit for your company. Availabilities, rental rates, and amenities have probably changed since you were last in the market, so it is worth the time to look at your options. During your research, you will become more knowledgeable about the commercial real estate market. Whether you stay in your current space or sign another commercial lease, this information can benefit your negotiation process.

 

Work with a Commercial Real Estate Broker to Negotiate

 

Do not underestimate the importance of using a broker to help you negotiate your commercial real estate lease renewals. In addition to sharing their market expertise, tenant representation brokers are always aware of the current market conditions, opportunities, owners, and other brokers. They provide you with leverage to get the incentives that you and your business deserve and have a genuine interest in seeing you win.  Tenant reps know how important the right office space is for your business. An experienced broker can add value to your commercial lease renewal process, negotiate any required terms, and answer any lease related questions.

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Commercial Real Estate Conflict – A Real Hurdle for Consideration

 

Resist the Urge

 

You are driving in your car and you see a  “For Lease” sign on the building. You happen to be in the market for space and you want to call for more information.  Logically, that makes the most sense, however, the phone number you see is for the building owner’s representation.  If you do not have your own representation, the situation can quickly become unfavorable for you.  You are one of the lucky ones if you DO know you are dealing with the competition but, unfortunately, many business owners aren’t even aware of the conflict in the first place.  They simply see a desirable building and call the number none the wiser.  Resist the urge to call the number on the “For Lease” sign.  Instead, take down the number and the broker’s information and give it to you tenant representation broker.

 

This is when the tenant representative rides in on the white horse and forsakes all landlord allegiances to represent only the tenant in commercial real estate transaction. Tenant representation has taken root in corporate America, where space users seek out tenant-only brokers and tenant-only brokerage firms have grown in response to this demand.

 

Get Exclusive

 

Tenant representation brokers are commercial real estate brokers who work exclusively for the tenant and never represent the landlord.  The tenant representative role developed in response to the conflicts of interest that were, and still sometimes are, rife in the industry. They are now a universally embraced, specialized sector of commercial brokerage, with a broader range of services focused on the unique needs of a tenant such as space planning, construction management, lease renewal consulting, site search, financial analysis and strategic negotiations.

 

Risk of Conflict

 

There is a very real risk of working with a broker who has blatant conflicts of interest.  It is in your best interest to be intentional when searching for a broker who only focuses on tenant representation.  In the old model, the landlords and their brokers held all the cards. The tenants were merely a means to an end. With the advent of tenant representation, the industry is waking up to the reality that the tenants actually hold all the cards, because the tenants pay the rent. In truth, landlords are utterly dependent on the rent tenants pay as their sole source of income.  Unfortunately, many tenants don’t realize they hold all the cards and have all of the power.  A good tenant representation broker will enlighten you on the leverage you actually do have.

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Why Should I Hire My Broker Exclusively?

Georgia Real Estate Law requires a tenant to have a statement in writing of their desire to hire a broker to represent them.

If you are a tenant looking for commercial space on your own, you have probably been speaking to the leasing agent who is the broker (or leasing agent) for the seller. The seller’s agent cannot offer any advice or guidance to the tenant and is not obligated to keep any information confidential. If you engage a tenant rep broker, you are stating that he/she legally represents you. This ensures there is no confusion about whom represents whom. This representation includes investigation and negotiation of the commercial property and the neighborhood that you choose, as well as the process for getting you the best deal.

Tenant representation is free to you. The seller pays the tenant rep broker to bring a tenant to them.  Typically, landlords have built in commissions for tenant representatives as well as for landlord representation.  If you opt to not engage a tenant rep broker to represent you, the entire budgeted commission goes to the leasing agent negotiating against you. The leasing agent does not care about your well-being and doesn’t have your best interest at heart. You will be required to sign a Letter of Authorization (LOA) which allows the tenant rep broker to work exclusively for you to find the best commercial space for your business.  It’s a simple agreement that can be negated with a one line email stating, “I no longer need your representation.” Then you are free to engage a different broker or find the space on your own if you so desire.

Often clients have difficulty articulating exactly what they want for their business.

You may start out by telling your broker exactly what type of space you are looking for but your preferences may actually change as you go around viewing different spaces. As a broker, I listen and watch the reaction each client has to every space I show him/her. I have learned to pay attention to the visceral reactions a client exhibits when viewing a property for the first time. This allows me to get a better sense of what they really want and, from there, I can narrow down the search. Going from broker to broker will not allow you to form this type of beneficial relationship which is the glue that holds good brokerage and good decision making together. Remember, your broker is going to work hard for you because he/she is never paid until you are happily in your new commercial space.  Getting your deal closed is a mutual goal.

Your tenant rep broker will also be able to identify any potential timeline issues by communicating to the leasing agent at the start of the transaction.  Some issues may include a committee approval which most business owners may not be aware of.  On occasion, the landlord will hire a large leasing agency to represent their interests.  The leasing agency may have a board or committee who must come together to vote on final lease structures which could cause a delay due to the number of parties involved.  That is just one unforeseen roadblock an exclusive tenant rep broker can prepare you for but your broker will be aware of many more potential pitfalls.