Sustainability and Leasing Decision †Free Samples to Students

Question: Discuss about the Sustainability and Leasing Decision. Answer: Introduction Acquiring a commercial house for business is one of the greatest achievements a new company can ever make. Such kind of building gives the company the autonomy to perform their operations with minimal surveillance from the individuals who supposedly lease the building. The cost of acquiring new building is usually relatively large especially because it has the value of the land attached to it. This explains the reason why a new company would have to lease space at some point. Moreover, due to financial constraints, a new business can be obliged to acquire spec through leasing. However, it is important to understand the leasing procedures and all the requirements for getting into such an agreement. This is because certain legal requirements are binding to the agreement. On the other hand, understanding the project is essential before any other thing to the new company[1]. Description of Projects This being a new company, the project must be one that allows space for future expansion. This is from the basic understanding that any new projects may have some changes in future due to the changes that occur in the global market with regards to the needs of the consumers of the products. Taking the need for expansion into considerations is the first most important step to the success of the business. The space for expansion should in line with the land acquired to bridge the problem of having to improve the size of the building. On the other hand, it can be with regards to the scale of the offices to allow the use of the room by many of staff in the future. It is a fact that a company that does not think of expansion at the point of inception is as good as dead from the onset. The rule is simply for the new organization, to survive longer think big, to remain forever, and think of how best you can expand what you have at the beginning[2]. An occupation of 30 percent of the office building at the onset of the project is a good start for the company. This being a new business, there is a need for the management to raise finances every fiscal year until the time the business would be able to be stable with the flow of cash from its operations. Moreover, it is not certain whether the company would make proposed profits during the first fiscal year from its undertaking. The truth of the matter is any eventuality may arise from the firm line of operation, and this may cause severe losses that may hamper progress in the business. For this reason, therefore, the company must have a second plan on how to raise finances. With 70% un-used office, I cannot think of a better way of raising extra money apart from making use of the free space. This would form part of the smart thinking that the company management is required to have. However, the big question is, how do we make use of this space to generate funds?' One of the lucrative projects that the new company can get into to make good use of the free space is renting the space to people who need offices. Most self-proprietor operators in the entire world are need of an office space where they can have their operations[3]. While most people would be specific on the kind of the office design they want, most people would simply need a spec that is big enough to act as an office. The need for the variety of the possible tenants can be achieved by having office spaces with different outlooks. Rents paid would heavily depend on the size and prospects of the office acquired. On the contrary, the interior dcor of the rooms should be left at the mercy of the tenants since each tenant may have different taste[4]. It is not advisable to have the entire 70 percent of space used for offices only. This being a commercial building, a lot of business would be going around at any particular time. It is therefore important to incorporate other business buildings in the building as well to supply the needs of the occupants of the building. It is well understood that the ways of life of people are changing quite a lot and every business must be flexible to embrace these changes. The best thing that the company can do is not only to invest in the building but also to consider investing in the people occupying the building. The fact is that these people would need food and other basic needs at the end of the day[5]. For this reason, therefore, part of the space of the office can be utilized in installing a facility such as a restaurant. This restaurant should be owned by the company. Moreover, it should focus on providing meals that would be preferred by most people in the building such as snacks and var ious kinds of beverages. This way, the company would have the money it spends on its employee and various building maintenance retrieved back through this business. In a way, the organization would be able to create a self-sustaining business operation that would be able to survive the business industry for quite a long time. Moreover, it would be easy to cover up for the losses through the multiple operations that would be going on within the building[6]. The investments that other people would be doing within the free space in the building should be diverse. This would be achieved by allowing all manner of business to be conducted within the premises through the rented spaces. It is the mandate of the company to ensure that space has a design that can accommodate different business. Increasing the operations within the business increases the financial flows, and this makes the organization's investment such as the restaurant to make good profits. Care should, however, be taken with regards to the infiltration of the building with illegal business. Moreover, the building must meet the standard requirements of the law before it can be used for multiple operations[7]. Identification of the tenants would be a very critical step in this project. The tenants that occupy the premises must all be able to pay their rent at the end of every month duly. Therefore, tenants would be identified based on their business proposals before they can occupy commercial spaces. However, those who want to occupy the building for the office would be asked to provide an overview of the operations they would have in the office. This would help to ensure that the landlord understands all the transactions in the premise and identified tenants with a lucrative business that cannot default in rent payment[8]. Leasing Proposal The lease proposal is an important document for the acquisition of this building. The new company must ensure it is provided with a copy that is correctly filled and duly signed. This would be the only line of defense in a court of law in case any of the parties involved in the contract of getting the building breaches the agreement. With proper documentation and filling of the lease of proposal document, it becomes easy to operate within the premises. The contract proposal would be provided before the rental agreement is signed[9]. If the tenant finds the provisions in the lease proposal suitable for them, they will consent to it and request for contract agreement which would act as the binding document for the tenancy. Sample lease proposal that can be used is as seen below. This Lease Proposal document herein outlines the proposed terms for a lease of the premises described above to you, [TENANT NAME] ("Prospective Tenant"), by [LANDLORD NAME] ("Landlord"). If you are interested in proceeding, the full Lease Agreement will be prepared and submitted to you for review and signature. NOTE: The lease is not transferable to any other tenant other than the one whose name appears on the lease document. Tenancy is continual for the period agreed upon in this document and can only be terminated due to failure to pay rent. However, before quitting the premises, the tenant must provide a 30 days notice indicating the time they would leave the premises. The Landlord may, however, send the tenant away at any time in case of breach of any of the regulations of using the building[10]. Proposed usage Office spaces and commercial use Note: The building would be used for office spaces and commercial purposes. The areas for each purpose would be designated to avoid confusion and interference. Rent the monthly rent paid would be $ 100 for the office space and $ 120 for the commercial occupant. Rent would, however, increase at a rate of 5% percent upon renewal of the leased space. Security Deposit the building is under 24 hours CCTV surveillance. The entrance of the building would be heavily guarded by security officers with scanners to monitor all entrants. Inclusions the amount of rent would be inclusive of internet and telephone connectivity. Moreover, water charges would also be part of the rent paid every month. The usage of these services would monitor at the central server of the building, and one may be requested to pay extra charges in case of extreme usage of this services. The additional fee paid may not exceed half the rent paid every month. Exclusions these include electricity and cleaning operations. Every tenant would be expected to pay their electricity bills. Moreover, they should organize on regular cleaning of their work space and corridors as frequently as possible to maintain high hygienic standards at all times. Assignment or subletting the tenant has no authority to sublet or re-lease the space allocated to them to anyone. Notice to quit the promise must be provided to the landlord by the tenant before new occupant can be given the space. Other items the tenancy period must be as indicated in this lease agreement. Failure to abide by the period indicated herein, the tenant would be required to continue paying rent until the time in this agreement expires or until a new tenant is identified for the free space. Lease Agreement A formal, written lease agreement would be executed between the Parties that would become the final agreement between them. If you are interested in proceeding to finalize a formal, written Lease Agreement under the scope set out above, please contact [Insert name of contact person] at [insert daytime mobile or telephone number] OR [insert contact person's email] at your earliest possible convenience. This Lease Proposal does not constitute a contract, or an offer to contract, but rather an invitation to proceed with further actions by the Parties towards the execution of a formal agreement between the Parties. Appendices Schedules Calculations of rent paid per Square foot Calculations of rent paid per Square foot Rent for office space in this building is set at $ 10 per square foot of the leased space. Expressing this as either annual or monthly amount can be done as follows: A 2400 square foot office space is quoted as $ 10 per square foot giving; 2400 $ 10 = $ 24,000 annual rent. Monthly rent, therefore, would be; 24, 000 12 months = $ 2000 monthly rent[11]. Determination of Percentage lease It is important to determine the base rent that is needed by the company wants before having those in the commercial buildings add a percentage of their gross retail income to the base rent. This is because the business environment varies thus leading to a variant gross income every month for the occupants of the commercial buildings. Ideally, imposing a fixed price for the occupant would not be logical. Percentage added to the base amount can be calculated as indicated below. Minimum base rent + percentage over a given base amount. This is a case in which the tenant pays a minimum monthly base rent. After paying the rent, they add a percentage of their gross receipts over a certain amount. If monthly base rent is $ 2,100 and gross receipt is 4% over 55,000. Assuming an occupant gets a gross receipt of $ 80,000 in a month, rent that month would be: $ 80,000 $ 55,000 = $ 25000 $ 25000 4% = $ 1000 Rent = $ 2,100 + $ 1000 = $ 3,100 This can also be determined by using the formula of minimum base income added to the percentage of all the gross receipts. This ideally means that rents would be paid on all the gross receipt from $ 0. For example, having $ 400 base rent and 2.2% of the gross receipt. If a business person within then makes a monthly receipt of $ 80,000, his/her monthly rent would be as follow: $ 80,0000.022 = $ 1,760 $ 1,760 + $ 400 = $ 2,160 monthly rent for the commercial space. Bibliography Burton, Gregory. "The law affecting rent review determinations ; The law affecting valuation of land in Australia [Book Review]."Bar News: The Journal of the NSW Bar AssociationSummer 2015 (2015): 76. Duffy, Francis, Colin Cave, and John Worthington, eds.Planning office space. Elsevier, 2016. Halvitigala, Dulani, and Richard G. Reed. "Identifying adaptive strategies employed by office building investors."Property Management33, no. 5 (2015): 478-493. Harris, Rob. "The changing nature of the workplace and the future of office space."Journal of Property Investment Finance33, no. 5 (2015): 424-435. Johnson, Steven D. "Flexible cash farm lease considerations."Ag Decision Maker Newsletter13, no. 5 (2015): 4. Johnson, Steven D. "Flexible cash farm lease considerations."Ag Decision Maker Newsletter13, no. 5 (2015): 4. Matzler, Kurt, Viktoria Veider, and Wolfgang Kathan. "Adapting to the sharing economy."MIT Sloan Management Review56, no. 2 (2015): 71. Reichardt, Alexander. "Sustainability and the Leasing Decision of Office Occupiers in the US." InSustainability in Commercial Real Estate Markets, pp. 65-92. Springer Fachmedien Wiesbaden, 2016.