After years of property owners conducting due diligence on the financial wherewithal of their tenants, commercial real estate agents say corporate clients are turning the tables when it comes to financial scrutiny.
With commercial real estate values down by as much as 40 percent nationwide and the number of foreclosures still growing, tenants in the market for new space now often conduct the kind of financial background checks of their new landlords they once might have been more likely to face themselves.
Dick Cassetti, a local commercial broker who does mostly tenant representation work, understands firsthand why.
Cassetti said one of his clients has given its landlord an April 6 deadline to make good on a promise related to tenant improvement money the client says it never received.
“Any large tenant of 20,000 square feet or more would be foolish if they could not get representations and guarantees that (their landlord) has money in the bank,” Cassetti said. “If the landlord is not willing to escrow the funds promised to the tenant for the build-out, then I as a tenant would look for a different landlord.”
It’s a very different reality from five years ago during a real estate boom, when such measures by tenants were relatively rare.
The motivations for tenants stem from the negative trends in real estate finance...
Read more: Pittsburgh Business Times
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A previous post that is pertinent to this issues is Protecting Your BusinsessLease Negotiations , Office Rental , Office Space , Office Space Negotiations , Tenant Representation