5 Common Leasehold Improvements

Typically, the next step after signing a commercial lease is starting work on leasehold improvements, also known as tenant improvements or tenant buildouts. These changes help tenants customize their new space to their particular business needs.

Any structural or cosmetic changes to the interior of a space are considered leasehold improvements. Exterior changes, additions, or changes to a building’s HVAC, fire protection, or security systems are usually not considered leasehold improvements. Landlords or tenants can pay for leasehold improvements.

Here is a general overview of common leasehold improvements for commercial properties.

1. Interior Structural Changes

It is common for new tenants to make structural changes within the footprint of the space they lease. Call centers may require cubicles, a law office may need to create a lobby, and a veterinary clinic may need to create exam rooms and lab space.

2. Addition of IT, Electrical, or Lighting Systems

Adding phone lines, internet and ethernet ports, and new lighting are considered leasehold improvements, too. Transforming a retail space into an office space or a medical clinic into a retail store will require significant changes to how a space is powered and lit.

3. Updated Wall Surfaces and Flooring

Updates to wall surfaces and flooring are also considered leasehold improvements. Adding drywall, painting, wallpaper, and other wall treatments are often necessary in reinventing a leased space for new use. So are changes to flooring. Carpeting may not be the best choice for a spa, and tile may not be appropriate for an office.

4. New Shelving and Countertops

Along the same lines, tenants may require new countertops and shelving systems to update their space. Adding shelving for a retail store may be a major investment, while countertop updates can make a huge difference in the look of a store, clinic, or office.

5. Installed Equipment

Permanently installed equipment, such as shampoo chairs at a salon or wash tubs at a pet grooming shop, also count as leasehold improvements. These type of tenant improvements cannot be easily removed at the end of the lease but are essential to the operation of the tenant’s business.

Leasehold improvements are part of the commercial lease process. Clarity Commercial can help landlords negotiate tenant buildouts with prospective applicants, including how the improvements will be paid for and by whom.

For professional guidance through the tenant improvement process, get in touch with the Clarity Commercial team today.

Two Clarity Commercial Property Managers Celebrate Significant Career Milestones with IREM

Addie Kubitz
Taylor Sonnenfeld

Minneapolis, MN (July 22, 2021) – Clarity Commercial is celebrating significant career milestones for two of the company’s up-and-coming property managers. Taylor Sonnenfeld was selected for IREM’s Next Gen CPM® Leaders program. Addie Kubitz was selected as one of IREM’s 30 Under 30 property managers and earned the organization’s ACoM certification.

Over the next 12 months, Taylor Sonnenfeld will join 18 other young property managers from across the country in the 2021-2022 Next Gen CPM® Leaders cohort. Together, the cohort will participate in a fast-tracked CPM certification program designed to rapidly develop talented property managers and create a professional community for the industry’s rising stars.

Ms. Sonnenfeld joined the Clarity Commercial team in June 2019. She started her career in 2014 managing and leasing residential properties in downtown Minneapolis. Today, she manages more than 100,000 square feet of office, retail, restaurant, and medical space for Clarity Commercial clients.

IREM’s 30 Under 30 has selected Addie Kubitz as a 2021 recipient. The purpose of the 30 Under 30 program is to acknowledge the next generation of real estate management leaders who have made a significant impact on the industry and their communities. Ms. Kubitz demonstrated her contribution to the profession through her career success, professional leadership, and community involvement.

At UW-Stout, Ms. Kubitz was an active student member of IREM. She served as the UW-Stout IREM co-president for two years, where she engaged students with IREM on local and national levels. Currently, she serves as the co-chair of the IREM Minnesota social media committee. She was awarded the IREM Foundation scholarship in 2020.

Ms. Kubitz joined Clarity Commercial in September 2020. As a Property Manager, she oversees six commercial condo associations throughout the Twin Cities suburbs. She earned IREM’s ACoM designation in Spring 2021.

Ms. Sonnenfeld and Ms. Kubitz will be recognized for their achievements on the IREM website and at the IREM Global Summit in Las Vegas in October.

To learn more about the accomplishments of Ms. Sonnenfeld and Ms. Kubitz or for professional real estate management assistance, contact Clarity Commercial Chief Manager Mel Schultz at 952-259-1222 or visit myclaritycommercial.com.

ABOUT CLARITY COMMERCIAL

Based in St. Louis Park, Minnesota, Clarity Commercial manages a diverse range of multistory office buildings, warehouse facilities, commercial condominiums, retail, and industrial properties across the Twin Cities metro area.

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Building Your Real Estate Portfolio Budget

Any successful commercial real estate owner will tell you a real estate portfolio budget is absolutely essential for scaling your investments. Not only does a budget help you understand how much you make and spend each month, it can help you plan improvements to your properties to increase revenue in the future. It can also reveal when you are ready to make your next property investment.

If you’re just starting to build your real estate portfolio budget or your current budget needs an update, here are a few tips from the commercial real estate professionals at Clarity Commercial.

Establish Your Portfolio’s Goals

Your budget is about more than numbers. It’s a vehicle to help you achieve your goals. Before you create your portfolio budget, consider what your 1-year, 3-year, and 5-year goals are. Do you want to increase revenue by 15 percent? Complete a major renovation? Purchase a new property? Whatever your goals are, you want to build your budget to meet them.

Start with Your Expenses

Take some time to gather and list all of the expenses associated with your properties, then include them in your real estate portfolio budget. Include maintenance, repairs, management, legal, staff, utilities, mortgages, and insurance costs. Don’t forget to calculate your vacancy costs as expenses, either. Vacant spaces cost you money each month and filling them should be your top priority.

Then Establish Your Revenue Targets

Once you have a grasp on your monthly expenses, you will have an idea of the amount of revenue you must bring in each month to break even or make a profit. If your current portfolio is covering your expenses, great! What else could you do to maximize revenue? If your current portfolio does not cover your expenses, work with a property management company to work out a plan for getting back into the black.

Put Your Profit to Work

If your portfolio is making a profit each month, think about how you want to reinvest that profit back into your portfolio. Are there capital improvements you need to make to your existing properties to attract future tenants? Perhaps there is a property you’d like to add to your portfolio. Your budget can help you forecast these future expenses and manage your profit so you’ll have the funds to achieve your goals.

If creating a budget for your real estate portfolio sounds intimidating, get in touch with Clarity Commercial. We’re experts in commercial real estate budgeting and forecasting. We can help you get a grasp on your expenses and revenue and plan for future investments. Contact us to learn how we can help you.

Commercial Real Estate Management Continuing Ed Opportunities

Clarity Commercial is a proud and active member of the Institute of Real Estate Management (IREM) Minnesota. In the next few months, IREM Minnesota is offering commercial real estate management professionals a full slate of professional and personal development opportunities. Here’s a look at what’s coming up in the second quarter of 2021.

Online – Asphalt and Concrete Maintenance | April 28

Starting a concrete or asphalt project this year? Don’t miss Asphalt and Concrete Maintenance on April 28 with two experts from Asphalt and Concrete Solutions. You’ll learn about the basics of asphalt and concrete and learn what to consider when planning, installing, and maintaining asphalt and concrete surfaces at your property. Eligible for 1 hour of continuing real estate education credit.

Enroll in the virtual training on the IREM Website.

Online – The Case of Rotting Roofs | May 11

This training takes a close look at a curious case of a non-leaky but rotting roof as a way to understand moisture build-up, vapor drive, vapor and air barriers, and other roof moisture issues. Learn how to assess moisture in your roof. Eligible for 1 hour of continuing real estate education credit pending Minnesota Department of Commerce approval.

Enroll in the session on the IREM website.

Online – How Property Managers Can Emerge Stronger and Healthier from Adversity | May 18

It’s been a tough year for commercial property managers. In this hour-long session, work with executive coach Matt Norman to increase your awareness of how you relate to your team, your tenants, and yourself and your work. Learn how to make choices in difficult circumstances and avoid anxiety and dysfunction. Eligible for 1 hour of continuing real estate education credit pending Minnesota Department of Commerce approval.

Register on the IREM website.

Clarity Commercial owner Mel Schultz, CPM®, CCIM, CCAM, is an active member of IREM and is passionate about continuing education in the commercial real estate industry. For more information about IREM and how our participation in the organization helps you, contact Clarity Commercial today

Subcontractors You Want on Your Team

One of the primary responsibilities of a commercial property management company is the hiring and management of onsite workers. Hiring subcontractors rather than part-time or full-time employees saves money, is easier on HR, and ensures you get the best quality and timely work possible.

Here are a few of the types of subcontractors Clarity Commercial finds, vets, hires, and manages as part of our property management services. These are the professionals you need on your team to help you maintain and manage your properties.

Building Maintenance Crew

Your building maintenance crew is onsite regularly to ensure your property remains in good working order. Your crew makes sure common areas are clean and functional and addresses tenant maintenance and repair requests. Depending on the needs of your building and your tenants, you may require a single crewmember or an entire team to keep up with maintenance and repair demands.

Mechanical Professionals

Periodically, your property’s mechanical systems require maintenance and repair. For most property owners, subcontractors are the right choice for HVAC, plumbing, electrical, and other mechanical work. Clarity Commercial works with only the best mechanical pros in the Twin Cities to ensure our customers’ mechanical systems are properly maintained.

Landscaping and Snow Removal Crew

All Minnesota property owners need great landscaping and snow removal crews on their list of subcontractors. Your property’s landscaping plays a role in attracting and retaining tenants, so hiring a competent landscaping crew is important. In the winter months, working with a reliable snow removal team ensures your driveway, parking lot, walkways, and entryways are clear and safe.

Window Washing Professionals

Your property’s large windows are a selling feature. Regular window washing keeps them clean and clear. Most commercial property windows are too large for someone to do on their own without the proper safety equipment. A window washing crew that comes out a few times a year can make sure your building looks great.

Finding, hiring, and managing subcontractors is a job all its own. Trust commercial property manager Clarity Commercial to find, vet, and manage the subcontractors you need to keep your property working and looking its best. Contact us today to get started.

Tips for Building Strong Tenant Relationships

Every commercial landlord wants to have happy, long-term, paying commercial real estate tenants. Just like anything worth having, building strong relationships with your tenants takes work. Here are Clarity Commercial’s top tips to strengthen the relationships you have with your tenants to ensure they stay happy, long-term tenants who pay the rent on time.

Communicate Regularly

Open and honest communication is the foundation of a strong tenant-landlord or tenant-management relationship. During lease negotiations, be clear about the expectations tenants can have for you regarding when, how, and how often you’ll communicate with them and vice versa.

Tenants are busy people just like you, so use a variety of methods to reach out to them. Letters in the mailbox or under the door, phone calls, emails, and texts are all effective ways to keep in touch with your tenants. You may also consider using a property management app to manage your communication with tenants.

Be Firm Yet Fair

Your property is a business, and your tenants have all signed agreements with you to pay rent every month for a certain length of time. As last year taught us, life happens. When dealing with tenants on any issue, but especially on issues regarding payment, it helps to be firm yet fair and empathetic. You and your tenants are not adversaries. If an issue arises, work together to find a solution.

Maintain and Repair Tenant Spaces

You expect your tenants to pay on time and be considerate to their neighbors and to you. In return, they should trust that you will answer their questions and address their requests and concerns directly, quickly, and professionally. Take maintenance and repair requests seriously and solve them the right way the first time. Implement a property improvement plan that includes property updates and upgrades to anticipate and prevent future tenant complaints.

Be Interested in Your Tenants’ Success

Your tenants are business owners, just like you. Be interested and invested in their success. The more successful they are, the more likely they are to continue to rent space from you, and possibly even expand their footprint. Your interest in their success will also make it easier for them to recommend you to the other business owners in their networks.

Building strong tenant relationships takes work, but pays off in timely rent payments and happy, long-term tenants. For help building and maintaining strong relationships with your tenants, partner with commercial property management company Clarity Commercial.

Start 2021 Off Strong with These Professional Development Events

Clarity Commercial is a proud and active member of the Institute of Real Estate Management (IREM) Minnesota. This year, IREM Minnesota offers commercial real estate management professionals a full slate of professional and personal development opportunities. Here’s a look at what’s coming up in the first quarter of 2021.

Online – Cultivating Diversity and Inclusion | February 4

As commercial real estate managers, we build community, and creating a community that secures equal opportunities and protections for all is absolutely necessary. In this hour-long training, learn how to cultivate a diverse workforce to ensure your company’s long-term success.

Enroll in the virtual training on the IREM Website.

Online – Marijuana in Commercial and Residential Properties | February 16

As the effort to nationally legalize medical and recreational marijuana gains momentum, it’s important to understand its possible effects on the commercial real estate market and the industry more generally. Learn about the challenges facing commercial real estate managers in regard to legalized weed and the potential opportunities legalization presents.

Enroll in the session on the IREM website.

Online – Student Connect Trivia & Networking | February 25

Do you have what it takes to become a trivia master? IREM student members can test their knowledge on February 25 at the Student Connect Trivia & Networking virtual event. Don’t miss your chance to show off your trivia chops and win prizes!

Register on the IREM website.

Clarity Commercial owner Mel Schultz, CPM, CCIM, CCAM, is an active member of IREM and is passionate about continuing education in the commercial real estate industry. For more information about IREM and how our participation in the organization helps you, contact Clarity Commercial today.

2021 Commercial Property Management Predictions

It is finally time to put 2020 behind us and take a look ahead to 2021. While the pandemic will have an impact on the commercial property management industry in 2021, experts predict COVID-19 will have several positive effects on property management next year.

The Property Management Experience Will become More Digitized

After surveying commercial real estate professionals across the country, the experts at Deloitte believe the rapid transformation from in-person to digital property management will continue into 2021. Management companies will continue to increasingly offer prospective tenants property tours online and provide an online leasing experience. Online communication with current tenants is likely here to stay, too, as rent collection and tenant requests are all managed via email and web applications.

Property Management Companies Will Rely More on Tenant Data

As the tenant experience moves online, property management companies will have more opportunities to collect and use tenant data to improve the tenant experience and increase portfolio revenue. Tenant data can give property managers a clear and accurate look at the books and provide crucial insights into what the future holds. Tracking data related to tenant requests and building use can help you better understand your tenants and meet their needs.

Tenant Footprints May Shrink . . . or Expand

According to the experts at PWC, the rapid transition to a remote workforce has caused many tenants to rethink their space needs. So too has the adoption of curbside service for many retail, restaurant, and medical tenants. In some cases, tenants may cut back on their square footage, eliminating office space or public areas. But others may do the opposite, expanding their footprints to accommodate social distanced collaboration. Property managers should be prepared to be flexible negotiating space in 2021.

Safety Upgrades Will Remain a Top Concern

The personal safety of tenants and guests will remain a top concern in 2021. Property managers will continue to improve building safety and hygiene with robust disinfection processes and updates to high-touch services. Others will upgrade HVAC systems to improve air circulation or install touchless technologies, such as automated lighting, doors, and AV controls.

Clarity Commercial looks forward to serving property owners in 2021 and beyond. To work with a professional property management team based in the Twin Cities, contact Clarity Commercial today.

Choosing an Onsite Property Manager

Selecting an onsite manager for your commercial property is one of the most important decisions you’ll make as a property owner. Your onsite manager is your boots on the ground, point of contact for your tenants, and record keeper for your property’s agreements, insurance policies, and accounting records.

Your onsite manager should work well with you and your commercial property management company. Often, Clarity Commercial will find, hire, and manage onsite managers for the property owners we partner with. Here is what we expect our onsite managers to do and what we look for in an onsite manager.

Your Boots on the Ground at Your Property

Your onsite manager is responsible for the daily upkeep of your property. They should walk your property to make sure public areas are clean and safe. Things they should take note of include overflowing garbage cans, slick walkways, burnt-out lightbulbs, and sticky key mechanisms in doors.  While they may not perform maintenance and repairs themselves, the onsite manager should work with your landscaping service, cleaning company, and maintenance crew to ensure jobs are completed quickly and thoroughly. An effective onsite manager has an eye for detail and is able to coordinate one or more maintenance crews.

Tenants’ First Point of Contact

In addition to serving the physical property, your onsite manager is the first point of contact for your tenants. They answer the phones at the management office and are the first point of contact for tenant requests. Your onsite manager may also be responsible for keeping tenants current with rent and enforcing property policies. An effective onsite manager is approachable, friendly, and comfortable asking tenants to pay rent or comply with your property’s rules.

Review and Maintain Property Records

Lastly, your onsite manager must be organized and familiar with your property’s records. At the management office, they will maintain accounting records, tenant files, and your property management agreement as well as your property’s insurance policy. While they may not have all of these documents committed to memory, they should be knowledgeable about your property’s policies and know where to look for an answer when asked a question about a lease agreement, rental payment, or insurance claim. An effective onsite manager is well-organized and knowledgeable.

These are just a few of the things Clarity Commercial looks for when hiring an onsite manager. We can help you find and manage your next manager so you can focus on growing your property portfolio. Contact the Clarity team to get started on your onsite manager search

2021 Renovations & Improvements to Consider

As the economy and Twin Cities real estate market continue to be affected by the prolonged effects of the pandemic, many property owners are thinking of creative ways to attract tenants to their buildings. While some have put 2021 building renovations on hold, there are several improvements property owners can make to help them retain current tenants and attract new ones.

COVID-19 Health and Safety Renovations

The smartest improvements you can make to your commercial properties are those that assure tenants your building is safe to occupy during the pandemic. A very affordable option is to simply advise tenants on how to configure their spaces to accommodate social distancing. Help them rearrange desk space or use your buying power with your vendors to offer low-cost sanitizing and personal protective equipment to your tenants.

You may also make long-term improvements to your building’s HVAC system and communal areas. Consider updating your air distribution system to improve indoor air quality and remove contaminants. In common areas, consider replacing soft furniture with hard surfaces that can be wiped down and disinfected frequently. You may wish to replace your current countertops with antimicrobial options now on the market. Motion-sensor lighting, automatic doors, and cloud-based controls for the AV in shared conference rooms can also keep your tenants safe. All of these improvements are selling points for potential new tenants.

Sustainability Improvements

While health and safety improvements meet an urgent demand, renovating your commercial buildings to be more sustainable will help you attract tenants and save money in the long run. Improving the energy efficiency of your building lowers your heating and cooling costs, keeps building occupants more comfortable, and is a major selling point for green-minded tenants.

Upgrading your building’s HVAC system not only improves air quality, it can save you money in the long-run. Efficient systems are more cost-effective to run and reduce your heating and cooling bill. So can energy-efficient windows and doors that help stabilize your building’s temperature, keeping it cooler in summer and warmer in winter. Updating your lighting to efficient LED bulbs can save you money in maintenance and electricity bills. Plus, the costs of upgrading lighting can be spread out over several years if you tackle one area of your building at a time.

It’s more important than ever to attract and maintain good tenants. Building renovations and improvements are a solid strategy for keeping your building competitive in the leasing market. For more tips on how to attract tenants, contact the Clarity Commercial team today.