Confessions of a Recovering Landlord

Confessions of a Recovering Landlord - My UVP

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 26 Apr 2012 09:06:27 -0700

The name of my blog has changed. It used to be called The REATA BizBlog because that name combined the name of my company with the fact that it's a blog about business. Makes sense.

But then I was at a networking function a few months ago and I opened my introduction with "Hi my name is Bob and I'm a recovering landlord" clearly spoofing Alcoholics Anonymous. There was no intent to make fun of AA, of course. But it seemed to really spark a reaction in people. They seemed to chuckle and then pay more attention to what I said next. I used it several more times in the next few months with the same reaction each time. Well, that got me to thinking about my Unique Selling Proposition (USP) or what I prefer to call my Unique Value Proposition (UVP).

I really am a recovering landlord. For 20 years, I represented owners of large office buildings and warehouse projects in Texas and throughout the country. My properties were in Dallas, Ft. Worth, Houston, San Antonio, Amarillo, Phoenix, Denver, Chicago, Milwaukee, Los Angeles, even Northern Virginia. I was a property manager, leasing agent and then an asset manager. I was the guy who signed the leases on behalf of the building owners. So I truly was a landlord.

But then I "switched sides" 8 years ago and began exclusively representing companies in their real estate decisions - leasing, buying, subleasing, selling, and consulting. Whatever a company needs related to real estate I handle for them. I don't represent any landlords anymore so I can be unbiased and free of conflicts of interest.

My title is Corporte Real Estate Advisor or Tenant Rep. Most of my work is in the Dallas area with a particular expertise in the far northern areas of Plano, Frisco, Richardson, Addison, McKinney, and Allen. But I also work in Houston, Austin, San Antonio and other cities as clients have the need.

The experience I had as a landlord really helps me represent my clients in a better, more comprehensive way because I understand how landlords think and what motivates them.

Therefore, I am recovering in the sense that I am totally focused on the companies which occupy the buildings which I used to lease and manage.

Thus, the blog name change to Confessions of a Recovering Landlord. It's totally consistent with my unique value proposition. Hire someone to negotiate on your behalf who has been on the other side of the table.

What's your Unique Value Proposition? I'd like to hear from you.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Dallas Ft. Worth Still Creating Jobs & Attracting In-migration

Bob Gibbons (Reata Commercial Realty, Inc.) — Mon, 16 Apr 2012 08:06:27 -0700

I recently heard Steve Brown, real estate reporter for the Dallas Morning News, speak at Collin County Day. He had some interesting statistics that I thought I should share.

1. DFW created 63,700 jobs in the last 12 months. An additional 100,000 jobs are forecast for the next 12 months. These jobs are heavily concentrated in the major cities, of course.

2. Texas continues to be a favorite destination for people relocating within the United States. Here is the largest contributing states: California (68,909 people), Louisiana (31,149), Florida (26,608), Oklahoma and Illinois (no numbers for these last two). I believe these numbers are for the prior 12 months.

3. DFW has the second-highest amount of construction activity in the US behind New York.

4. Housing is actually in short supply in DFW with only 3-4 months' supply. 6 months is considered a balanced market.

5. Only 1.8% of homes in Texas are in foreclosure - one of the lowest in the country. Florida, on the other hand, has 14% in foreclosure. I'm not sure if these percentages are the current numbers or the total percentages since the economic crisis started in 2008. I suspect it's the latter.

So the bottom line is that DFW is still the place people want to be. We are seeing the impact of all this on the commercial real estate market. Rental rates are rising fast in the areas where people really want to have an office - Uptown and along the Tollway in Plano. For tenants, now is the time to renew your lease early and lock in for as long as your business plan allows. A building in which I placed a client only 18 months ago is now quoting $5.00 per square foot per year more than when we did the deal. That's fast.

Please let me know if I can help anyone you know who has an office lease in the DFW area. Thanks.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Rates are Going Up

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 22 Mar 2012 14:44:50 -0700

While searching for office space in west Plano on behalf of a software development company, I noticed that rental rates have gone up considerably. Class A office buildings are now quoting rates in the upper half of the $20’s plus electric.

My favorite office building is Granite Park III which is quoting a whopping $29.50 plus electric. Many others are in the $26.00 range. Most class B buildings are over $20.00 plus electric.

So while the media is still sounding the alarm about how bad the economy is, landlords are quietly raising rental rates, reducing the amount of free rent they are giving and taking away other concessions.

Another landlord refused to give a renewal option on a 6,000 SF tenant. That’s a first for me. Another didn’t want to provide any improvements to the space for a renewal other than paint and shampooing the carpets. A third pulled its proposal saying that we waited too long and rates were going up. He also said they wouldn’t do a 3-year term. It’s 5 years or longer. Period.

What should a tenant do?

If your lease expires in the next 12 – 18 months, you should talk to your corporate real estate advisor (and that should be REATA, of course) to discuss the possibility of renewing early if you like the building you are in. While the rate may be higher than you are paying now, it may not be as high as what it will be if you wait until your expiration date.

Please call me if you would like to discuss this further.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

What's the Best Business App for the iPad?

Bob Gibbons (Reata Commercial Realty, Inc.) — Mon, 19 Mar 2012 12:29:45 -0700

My lovely wife bought me an iPad 2 for my birthday at the end of February. I was so excited and spent the rest of that day playing with it, downloading apps and generally being anti-social notwithstanding the fact that we had a housefull of guests.

After my wife complained that she had only seen the top of my head since lunch, one of our friends reminded her that it was she who had "invited Hagar into the camp." Nothing like an Old Testament reference to add hilarity to 21st century gagetry.

Was I happy with the gift? Extremely....that is until Apple scheduled a March 7 huge announcement that all watchers were sure was the next generation of iPad. I could keep the 2 or I could take it back and upgrade to the 3 or at least get another 2 at a discount.

I took it back and then spent the next 2 weeks like the un-gadgeted loser that I had previously been. How did I function back then?

I pre-ordered the iPad 3 and eagerly picked it up on March 16 - last Friday. But I was good and put priorities where priorities belong. I hardly used it the rest of that day or evening.

Now the dilemma for which I need your input - What is the Best Business App for the iPad?

So far I have downloaded the following:

All my email accounts, Apple Store, Overdrive, Evernote, CNN, Pandora, Dropbox, the Bible (YouVersion), LoopNet, PluggedIn, Skype, Kindle, LinkedIn, Facebook, Fandango, Redbox, DocScan HD, Shazam, Dallas Business Journal, CNN, Calculator Pro, Google Earth, OpenTable, NBC, Dictionary, NPR and Angry Birds.

Okay, so some of those stretch the definition of Business Apps just a little. But I'm sure they will all be useful in some way soon.

So what is your advice? The best app to increase business sales or productivity? Especially for a commercial tenant rep. I await your sage advice.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Managing Growth in Your Lease

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 15 Mar 2012 13:08:30 -0700

Growing companies often face a dilemma when a landlord requires a 3-5 year lease. Lease only the space they need today and risk not having the space they need as they grow. Or lease more space than they need now betting on the growth that then doesn't occur.

So what to do? The best way to handle this dilemma is to sign a lease for the space they actually need now to take care of the immediate need and include an expansion provision. Expansion provisions come in a variety of forms:

Expansion Options

Rights of First Refusal (ROFR)

Right of First Offer (ROFO)

Must-Take

An expansion option means that the landlord holds space off the market for some period of time until a date on which the tenant has the exclusive right to lease the space. Landlords hate this because it means there is little to no chance they are going to get revenue from that space during that time.

A right of first refusal (ROFR) entitles the tenant the right to accept or reject an offer on expansion space on which the landlord has received a third-party offer it is willing to accept. This is especially advantageous for tenants who are expecting growth and would like to control an adjacent space. Granting the ROFR to a growing tenant can be advantageous to a landlord because of the existing relationship and the far-reaching financial benefits of having a long-term, stable tenant in place.

ROFRs can be structured many different ways, but often require that the terms of the third-party offer be matched. Those terms may not fit the tenant’s situation..or the landlord’s for that matter. Additionally, the control of an available space as a result of the ROFR jeopardizes the landlord's ability to market it.

Rights of First Offer (ROFO) clauses are similar in that they grant an existing tenant the right to negotiate for a space being pursued by an interested tenant. A ROFO grants a tenant the opportunity to negotiate for the subject space when it first becomes available…not simply agree or disagree to terms already negotiated by another party.

Receiving a ROFO in a lease often satisfies a tenant's desire for growth while significantly reducing the landlord's obligations and improving its ability to market space. Thus, many transactions pass over the ROFR in favor of the ROFO.

For both the ROFR and ROFO, a tenant should ask that the space be re-offered if a competing negotiation fails or if the terms of the current offer improve significantly in the favor of the third party.

Finally, the Must-Take is a mechanism whereby the additional space that a tenant is going to need for growth automatically becomes part of the leased premises on an agreed date. If the tenant leases 5,000 square feet (SF) initially, it might also commit to lease an additional 1,000 SF which automatically becomes a part of their space after 6 or 12 months.

Any construction required is done at the same time as the initial premises in most cases. That way the space is guaranteed to be ready when the tenant needs it. The only risk is that the tenant’s growth doesn’t occur on the schedule expected and they may then be obligated to an additional expense before they need it.

But let’s face it. Dealing with space needs for a growing company is a far better problem to have then excess space for a shrinking one.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Is Your Corporate Real Estate Advisor Your Business Partner? And Only Yours?

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 01 Mar 2012 17:36:40 -0800

Working with an exclusive tenant representative is the best way for commercial office tenants to be assured their company's mission is at the heart of a lease transaction. The best tenant representatives are more than just lease-to-lease brokers, they are ongoing real estate business advisors.

But what happens if your exclusive tenant representative also provides landlord services or joins a full-service company?
This business strategy introduces a number of serious consequences to your relationship. Namely, it raises a number of questions about how your long-term real estate strategy will be handled. Can your tenant representative assure you of business confidentiality with landlords on his or her client roster? And, will those landlord relationships influence their perspective on how to best serve tenants? In short, will there be a conflict of interest? Can you trust his/her advice?

It's important to envision your company's status within the ranks of a full-service commercial real estate company. Where would a commission-based client land amongst a list of clients that provide income every month or at least the potential for continuing income over time? Moreover, will your agent be handling a number of additional new accounts that would hamper the level of service which you deserve and should expect?

Tenant representatives at full service firms are often working with clients that have multiple sites involving in-depth lease administration and transaction oversight. How quickly then, will your phone call about an unforeseen landlord expense be returned?

Full service tenant representatives will remind clients that intangible characteristics are the most important, concepts like integrity, trust and market knowledge. To that end, if a company could work with an advisor who possesses those qualities, without the inherent risk of working with a firm that also works with landlords, would that not be the better scenario?

Your relationship with your tenant representative should be examined like any other critical business partnership: with sincerity, professionalism and an eye on your bottom line. Since real estate is such a major contributor to the performance of that bottom line, very little should be left to chance. That's why it's so crucial for your corporate real estate advisor to be your partner, and only your partner.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Marc Hoppers discusses REATA Service

Bob Gibbons (Reata Commercial Realty, Inc.) — Fri, 24 Feb 2012 16:27:10 -0800

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

DFW Office Market on Fire - Okay, Relatively Speaking

Bob Gibbons (Reata Commercial Realty, Inc.) — Wed, 15 Feb 2012 18:58:10 -0800

The DFW office market is getting really hot as reported by BISNOW's commercial real estate newsletter. In 2011, the DFW market absorbed 2.4 million square feet (SF) of office space. That's the highest since 2005 and triple 2010's absorption. The 2005 number was 3.4 million SF.

Absorption is the best measure of demand for space. It is the net change in occupied space from one period to the next. For example, if 250 million SF were occupied on 12/31 and 253 million SF were occupied at 12/31 of the next year, there was 3 million SF of positive absorption that year. If less space was occupied, then we would have had negative absorption.

Amazingly, there is still new constuction in the market - 785,000 SF of it largely build-to-suit projects which are expected to be delivered this year in Plano and other areas. No new projects are scheduled to start though. So that means that vacancies should decrease if positive absorption continues and rental rates could firm up. Landlords could start pulling back on the amount of free rent they are offering to tenants as well.

BISNOW cautioned tenants to beware because rental rates are starting to tick upwards. They said there are 6 million SF of active deals in the market and those are just the ones with 25,000 SF or more. Many of those are likely existing tenants considering a move so that wouldn't result in all positive absorption.

Good news for landlords. Not so much for tenants.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Direct Mail - Contrarian Marketing?

Bob Gibbons (Reata Commercial Realty, Inc.) — Tue, 07 Feb 2012 10:23:40 -0800

I am somewhat of contrarian. If everyone agrees on something, I'm usually the one to take the opposing view.

If I'm talking to my politically right-wing family, for example, I tend to bait them with the obvious benefits of universal health care, legalization of drugs and illegal immigration. If I'm with a bunch of left-wingers, on the other hand, I've been known to advocate the death penalty, abolition of the entitlement programs which keep the poor in their place, and deregulation of business.

It's healthy to have an opposing thought occasionally just to make sure you aren't falling into the trap of group think.

But does that work in marketing?

For the last couple of years, electronic marketing has been the rage - enewsletters, Adwords, social media, etc. I've sat through countless presentations on these subjects. Which got me to thinking....

If everyone else is running to electronic marketing, should I start a direct mail campaign just to stand out?

I don't get a lot of direct mail advertising in my mail box anymore. I don't get much of anything in my mailbox anymore. Most of my bills are handled electronically now too.

But it's just so easy to just hit the Delete button. My enewsletter goes to 2,400 email addresses every month. About 26% of those get opened up which is a little over 600. I'm told that's pretty good. But that means that around 1,800 never see it.

If I were to send a direct mail piece to that same list of 2,400 people, how many of them would see it? Now this isn't a list I purchased. This is a list of people with whom I have had some contact in the last few years. I bet the percentages would be just the opposite - 74% seeing it and 26% lost or thrown away before being seen.

I am most interested in business services since that's what I do. My clients are companies that lease office space. As a tenant representative, I represent their interests when searching for space and negotiating against the landlord. I do this primarily in the Dallas area especially in far north Dallas, Plano, Frisco, Richardson and Carrollton.

So what do you think? Is direct mail dead or has its time come? Have you tried direct mail in the last 2 years? If so, how often do you send something? What have the results been?

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Want the Best Deal - Shop Widely

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 12 Jan 2012 18:48:23 -0800

This may sound trite, but it's true. If you don't look around for whatever product or service you need, you probably won't get the best deal. How likely is it that the first quote you get will be the best option?

Notice I didn't say the lowest cost. Low cost is not always the best choice.

This is particularly true when dealing with an incumbent. Your current landlord is an incumbent. The landlord knows that it's far easier for tenant to simply renew its lease than move. Moving costs are avoided. Production doesn't go down due to the disruption of a move. So the incumbent landlord usually quotes a rental rate that is higher than what they might give a new tenant.

So when your office lease renews, shop the market for other options even if you really want to stay where you are. This gives you other points of reference. It also tells your incumbent landlord that you have other options and are willing to leave if you find a better deal.

The other recommendation is that you hire a Corporate Real Estate Advisor or Tenant Rep. This will sound self-serving since I am one of those, but when I was a landlord I found that the building owner usually got a 10-20% better deal if the renewing tenant didn't have a broker. The landlord assumes that the tenant isn't shopping the market if they don't hire a broker. Since the broker doesn't cost the tenant anything, there is no downside to having representation.

So shop. For space. For phones. For movers. For contractors. And enjoy the savings or at least the confidence that you got a good deal.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Marketing 101 - Know Thy Ideal Referred Client

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 05 Jan 2012 21:47:29 -0800

Most of my business comes from referrals. From past clients. From members of networking groups of which I'm a member. Occasionally, from other real estate agents - both commercial and residential.

Referrals are great. I rarely have to compete with other brokers for the business because the prospect already knows I'm qualified, competent and trusted. So I'm clearly a great fit for them.

But are they a great fit for me? Watson, we have a problem....maybe.

As a Corporate Real Estate Advisor or tenant representative, I represent companies which lease commercial space for their company use. My ideal client is a company which already leases space in a multi-story office building in North Dallas, Plano, Frisco and Richardson which have 10 or more employees in that office. I have underlined the key characteristics of the ideal client to be sure they can't be missed.

This is who I most want as a client. It is to these prospects that I will spend time and money marketing. I never spend time or money marketing to a non-ideal client. Ever.

So what do I do when one of my referral partners or past clients refers me to a company which wants to lease a warehouse or shopping center? Well, just because a prospect isn't the ideal doesn't mean I can't help them. It just means that I won't go out of my way to seek them out or spend money to find them. It also means that I will think long and hard before taking them on as a client. I have to ask myself, "am I the best solution for this company's needs?" If the answer is no, then I refer them on to someone who is a specialist in the service needed by that company.

Be sure you know who your ideal client is so you know who to ask your referral partners to send you. You can't serve everyone so be sure to serve the ideal first. If you have time left over, you can serve a few others occasionally.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

7 Things Highly Productive People Do - Can't Say That I Do

Bob Gibbons (Reata Commercial Realty, Inc.) — Wed, 14 Dec 2011 10:05:26 -0800

Schedule your email. Stop multi-tasking. Eliminate distrations.

Don't I wish. Easier said than done, right? These are just 3 of the 7 things highly productive people do according to an article by Ilya Pozen on Inc.com (http://www.inc.com/ilya-pozin/7-things-highly-productive-people-do.html).

As service providers, it's almost unthinkable to let a ringing phone go to voicemail. Or to check your email only 2 or 3 times a day. But how can I really get things done if I answer every call and check email every 15 minutes?

I'm no expert and have decidedly not implemented these steps fully or at all in some cases. I've tried time blocking and other methods to get more organized and efficient, but I have an uncanny ability to postpone things or allow priorities to get adjusted when something should be done that I don't want to do.

Time Management is a term we have all heard for a long time. But I think it's a misnomer. No human can manage time. Albert Einstein played with time, but eventually was the victim of it (he's dead).

The real issue is Priority Management. I am in charge of my priorities. I can decide what I'm going to do first, last or never. So at any point in time I should ask myself, "what's the most urgent thing that needs to be done right now?" Then I should do that thing. How often do you think that hitting the Send/Receive button in Outlook will be the top priority?

One of the best things I have done is start using the Task List in Outlook. This allows me to keep a list of things I need to do and assign a date and/or time to do them. But the best thing is that if I don't get that item done (unlikely since I never procrastinate...yeah, right!), it automatically rolls over to the next day. I can't get rid of those pesky To Do's unless I purposely delete them or mark them completed. I have some peace of mind knowing that I'm not letting things fall through the cracks. I'm just widening the cracks for fit more To Do's which I may or may not complete at some indeterminate point in the future. But at least I'm aware of them and have to consciously choose to do them or not.

So I'm curious about what you have done to become more efficient, effective, and prioritized. What tools, tricks or techniques do you use to get things done and not walk out of the office at the end of the day wondering what you accomplished?

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Selling to the C Level - Radio Show

Bob Gibbons (Reata Commercial Realty, Inc.) — Thu, 01 Dec 2011 17:26:20 -0800

I was the guest on this radio show Monday night. We talk about selling to CEO's, CFO's, etc. Please listen and let me know your feedback. Here is the link - http://www.blogtalkradio.com/selling-to-the-c-level/2011/11/28/selling-to-the-c-level-with-bob-gibbons-of-reata-inc.

Here is the text if you prefer to read it:

Patrick: Welcome to Selling to the C Level. Today, my guest is Bob Gibbons and Bob is a commercial Realtor. One of the things that I’m really excited about Bob is that he’s not the normal kind, which is going to be fun. I think you’ll really enjoy that.

The whole idea behind Selling to the C Level really came to me out of the number of salespeople that are always trying to reach the CEO, CFO, COO of any company and to influence them in a way that is favorable for their company. I sell to them. Well, selling to that group is not like selling to a lot of other people. It’s a different breed is one way to describe it.

If you are a CEO, CFO, COO, you know what I’m talking about. Your time is extremely guarded and we get that, but as sales people, our objective is to help you get where you want to go and to reach you in the best way that we can.

Let me tell you a little bit about Bob. Bob is a corporate real estate advisor, or tenant rep, with Reata Commercial Realty Inc. Reata is a tenant advisory firm. In fact, Reata is an acronym which stands for Real Estate Advisor and Tenant Advocate – a little different.

Bob started his real estate career 27 years ago, still in college actually, and just shy at 21 years old. He spent the first 20 years working for landlords negotiating against tenants. He was responsible for over 13 million square feet of buildings from coast to coast owned by pension fund insurance companies and private equity investors. He was a property manager, leasing agent, and asset manager. Basically, he did it all.

Bob now uses that experience to exclusively negotiate for tenants, providing leverage to them when negotiating with landlords. In 2004, he formed Reata Commercial Realty Inc for that purpose and that purpose only. Bob is a Texas real estate broker, a member of trade associations and non-profit boards and holds a BBA in Finance, and an MBA from UTA, and the University of Dallas respectively.

Bob, thanks so much for giving some time today to be on Selling to the C Level.

Bob: Thank you so much for letting me be here, Pat.

Patrick: I want to get right in to your story. You have so much experience kind of working against the tenants. Now, you’ve flipped the fence. You’re on their side. How did you get there?

Bob: Well, I think like a lot of us we don’t actually end up where we thought we were going when we started out. When I was in college, I never thought I would be a corporate real estate advisor. Heck, I didn’t even know those existed, but I was building cabinets for houses and got tired of that and wanted to do something that was “business oriented.” So, I went to the UTA business office, student employment actually, and said, “What do you got?” and ended up finding a job for what was called a market research analyst and I thought, “Wow, that sounds impressive.”

I had no clue what it was, but I went for the interview and I got the job. It turned out to be a commercial real estate investment company – a Belgian investment company, to be exact – that was based here in Dallas. It was actually some guys that had come over here from Belgium for their MBA and started doing investments and didn’t leave. I started that and one thing led to another. They bought a bunch of buildings in downtown Dallas around the farmer’s market, and they asked my boss and I to lease them and manage them. So I suddenly was a property manager and leasing agent.

Then we kept doing a lot of things with them, but ultimately, that was the 80s. Most real estate companies went under in the 80s with the horrible market that it was and I ended up going to work for another company that was in commercial real estate. They were a national owner of high-rise office buildings and warehouses and that’s really where I got a lot of my great training on how buildings work, and how landlords work and that kind of thing.

Then went to a third company that was a Chicago based national company and I was one of their four regional VPs in the country. That was even a better place to learn how landlords think, what makes them tick and all that. We own about 80 office buildings around the county. When that company decided to sell everything due to a family squabble (they started suing each other so we had to basically shut everything down so that they could go their separate ways), I got to thinking, “What am I going to do next?”

As I got to thinking about it and talking to people who were advising me, it became clear that really nobody that represents tenants exclusively has that kind of a background. It’s sort of like the district attorney becoming a defense attorney. You switch sides and now you can represent the other side better because of the knowledge you have from the other side.

Patrick: That’s exactly right. I know that whenever you’ve got an opportunity to be somebody’s advocate and you’ve actually played the game against them long enough, and hard enough, and well enough that you become the greatest asset that they could put on their side. I imagine that has really served you well.

In your business, you represent the tenant. You typically are selling for the CEO of a company and negotiating for them. Is that about right?

Bob: Yes, it is. I would say it depends on the size of the company, however. Whenever you’re dealing with a smaller company, especially one that tends to be local or regional (let’s say a company that’s based in the Dallas area and primarily serves the Dallas area, or maybe they’re based in Dallas and they serve the Texas market or the southwest market), typically the smaller companies, we’re dealing with the CEO, the owner, one of the partners, etc.

As the company gets larger, however, then it tends to gravitate toward the CFO or somebody in that chain of command. When you get to the really huge companies, multinational companies –the Sears, and IBMs, and AT&Ts and all those kind of things – then you end up with a midlevel manager who’s sort of a commercial real estate executive who manages all of the leases and/or owned properties that the company deals with throughout their corporate structure.

Patrick: Right. I get that. In dealing with the CFO, how are you having great influence in that area? What are you doing to create the success you’re having there?

Bob: The main thing that a CFO has to look at is cost and how they’re getting the biggest bang for the buck that the company is investing in their business. What a lot of people don’t realize is that the real estate cost – the occupancy cost – for that company is typically the second highest expense of the company right behind everything related to people. You take all the people, the salaries and the benefits, etc., that’s number one in most companies.

Number two then is their occupancy costs. The rent for their office space or their warehouse space is usually number two. Occasionally, it might slip to number three if there’s a really capital-intensive business like a high-tech firm that requires a lot of high-tech machinery, equipment, technology, etc. Either way, second or third is still pretty high.

The big difference, however, between the real estate and the people is that – good or bad – people can be hired and fired relatively quickly, so it’s really a variable cost. Whereas, if you own a building or if you lease a building, it’s suddenly not variable. You’re stuck. It’s a fixed cost for the period of time that you own it or the period of time of the lease.

Most leases average about five years. Sometimes they’re a little less maybe three; sometimes there’s as many as ten or even 20 years. Once you sign that lease, you’re stuck to the terms of those leases. You really need to think strategically about where the company has been, where it’s going long-term (not just the next quarter – or the next year, even) because that can get you in trouble in a hurry.

Patrick: Exactly. One of the things that I would be concerned about is with the way that liquidity is so tight right now even getting a loan to buy a building must be incredibly hard, but then beyond that, things change to quickly in the economy where industries that used to be just untouchable, they were the Rock of Gibraltar kind of solid, have become far less than they were. How do you deal with that? What do you do? What do you recommend?

Bob: Well, there are a few things. The first thing I would recommend is don’t own the real estate. That is going to come as a shock to some people – a real estate broker saying, “Don’t buy real estate.” I don’t take listings typically. The only time I have listings is when a client no longer needs the space that they occupy for their company. Then they need to either sell it or sublease it because they don’t need it anymore – they’ve laid people off, they’ve closed a division, closed an office.

My goal is to represent the needs of the company. Usually, that means that we’re going to be acquiring space for the company to use, usually through lease. Most companies do not want to own their own real estate, the real estate they occupy. Even the companies that you would be surprised about – Wal-Mart, for example. Most Wal-Marts are not owned by Wal-Mart.

Patrick: Really?

Bob: Yes. They build the building and they sell it to some investor, and then they lease it back and that gives them capital to go out and build the next one and to grow their business. Walgreen’s does not own their buildings. Taco Bell. Hotels. The Hotel Intercontinental in North Dallas is not owned by the Hotel Intercontinental, probably. It’s probably owned by an investor that owns the building and then Intercontinental is their management company. They manage the buildings. It’s what they call, “Flying the flag.” We fly the flag of Courtyard by Marriott or whatever.

Most property is not owned by the name that you see on the building. Companies do that number one because they want flexibility, which is where you were headed with your question. They want flexibility. Even though I said earlier that it’s really not flexible, it’s a fixed cost, well, that’s true during the term of that lease, but once that lease is over then they have the flexibility to go somewhere else to expand, to contact, to renew – a lot of them renew. So that’s one way to have the flexibility is to lease not own.

There are other benefits to leasing versus ownership like you get to write off the whole thing instead of having to capitalize and amortize the cost over a long period of time. You don’t have to carry it on your balance sheet, so it’s not going to dilute your return on equity. And there are other things I’m not going to get into here.

There are a lot of ways to get flexibility in the lease, and it’s usually in the form of options. Options are always bad for a landlord and always good for a tenant, so you always want to get as many of those as you can.

Do you know what the game is Jenga with the little wood blocks?

Patrick: Sure.

Bob: Think of a building as Jenga. In Jenga, the goal is to take the blocks of the bottom and put them on top, but every time you do that you make the stack a little more unstable. Well, that’s exactly the way a landlord looks at a building. Every space in that building is occupied, hopefully, by a tenant and the more stable that tenant base is the more stable the rental income is, and therefore the more value it has. It’s easier to finance. It’s easier to sell. That’s what the landlord ultimately wants to do.

But every time they give the tenant an option – an option to renew, an option to terminate, an option to expand – now they’re taking a little bit of their control and saying, “Here it is, tenant.; you can have a little bit of control,” which means that that stack of blocks get a little more unstable from the landlord’s perspective and a little more stable from the tenant’s perspective.

One of the big things we do as tenant advisors is we try to stack the deck in the favor of the tenant. We want to get as many of those little blocks for the tenant and take them away from the landlord. That way, our tenant has more control over their destiny instead of the landlord.

Another example of that would be something that most people don’t even think about when it comes to a lease is a death and disability clause. Now, we don’t get these on most deals and they don’t make sense on many deals. But let’s say you have a company where the rainmaker is the owner of the company. If he or she leaves or gets hit by a bus or becomes permanently disabled or dies, the company basically doesn’t exist anymore because they were the ones that brought in all the business and they have all the relationships.

Well, if that’s the case, you might want to try to get a death and disability clause in your lease so that if that person does get hit by that bus now there’s an option to terminate the lease. Landlords hate that. Again, you’re taking control away from them. You’re making their stack of blocks a little less stable. It’s not an easy thing to get, but we have been successful in getting that at times. Now, that can be insured. You can buy life insurance and insure it that way, but if you can keep the insurance for the heirs and not for the landlord, all the better.

Patrick: I get that. That makes a lot of sense to me. That’s a great thing to look at. What are the ways that you can get more favor for you and remove some of the control for them? I’m sitting here listening to what you are saying and thinking this real estate game is really all about continuity and how can you build a box that has more sources of revenue coming out of it, and they’re solid and they’re just a continual, renewal, auto-debit kind of thing every month so that you’ve got a more valuable asset for resale or just for revenue generation. That makes sense.

You’re working with folks. I do want to get into who you ideally try to find as a client. Who’s your ideal client?

Bob: Well, for me, specifically, my company is a very small boutique company, so the kind of client that we’re looking for is going to be typically a local or regional company in the Dallas area or a national company that allows their local people to make the decisions on the real estate.

For example, if Google wants to open up an office in Dallas, they probably midlevel manager somewhere in their California office that’s going to handle that. Well, that midlevel manager wants to do a good job for Google, his employer, but one of the biggest issues he’s concerned about is “don’t screw up, don’t make the wrong decision, be able to defend the decision I just made.”

Patrick: I was just thinking is just that old CY -whatever. Cover yourself.

Bob: Exactly. In the 1980s when the saying was, “Nobody ever got fired for buying IBM,” and it’s pretty much the same way in my business. A midlevel manager, for the most part, is going to try and make a decision that they can defend, so they want to be able to hire one of my big competitors. Jones Lang LaSalle, Cushman and Wakefield, CB Richard Ellis - these are large international commercial real estate companies that have lots of offices all around the country, and in some cases, around the world. That’s who the big, big companies with a midlevel manager are likely to go work with; whereas, my clients are typically going to be the local companies, the regional companies, the companies where I’m dealing with somebody who is being paid by the bottom line.

My ideal client is a local or regional company who already leases office space and may want to move, may not want to move, may not know which they should do. Maybe they want to stay; maybe they want to move. They’re not sure. They want to explore their options. Maybe they’re thinking, “Should I buy or should I lease?” We can do the buy/sell analysis as well.

Like I said earlier, most companies don’t want to own. There are some that do. I have a client that will never lease space. He only wants to own. It’s just the way he’s wired. There’s nothing wrong with that; it’s just what makes sense for him.

And really that’s something I should’ve said a long time ago is we really start with the corporate goals and objectives. Let’s face it: nobody really wants to have to pay rent. You don’t want to pay that money out every month if you can help it. You’ve got to do it to run your business, but you really don’t want to. You’ve got to make sure that that expenditure, especially since it’s your second or third highest expense, is supporting the goals and objectives of the organization.

When we start with a client, we don’t want to talk about real estate. We want to talk about where have you been, how have you grown, where do you see your company going in the future, who is your customer, where are they located, where are your employees located, where do you live. That’s a big one. If you ever want to know where a company’s going to locate, find out where the decision maker lives, and that will give you a huge clue.

All those things are important, but start with the corporate goals and objectives and then figure out how to fit the real estate into that picture to support those goals and objectives instead of the other way around.

Patrick: If you were to try to reach the North Dallas area and you had the ability to tell them, “This is what we really bring to the table?” what would you say to that? How would you answer that question?

Bob: Basically, what you’re asking is what are the benefits of using a broker like myself or, more important, what’s the benefit of using me versus other brokers? The typical, most important things you get when using a broker is, number one, you get negotiating leverage because if you’re not in the real estate business, you probably don’t know how to really negotiate a real estate transaction.

Just like I’m not in the IT business. I don’t really know how to do anything in the IT world, really. Or pick a world – insurance. My wife’s in the insurance industry. I don’t know jack squat about the insurance industry. And you know what? I want to keep it that way. I want to let her deal with it. I don’t want to.

Patrick: Ignorance really is bliss in some areas, isn’t it?

Bob: Especially insurance, my goodness. Anyway, I digress. Leveling the playing field is a big thing and giving the tenant leverage, giving them negotiating leverage. They don’t have all the knowledge, but they can hire me and I’ll give them all the knowledge, especially all the knowledge from the landlord’s perspective that I had in my first 20 years in the industry.

That’s a huge one: market knowledge. You can negotiate without knowing the environment in which you’re negotiating. If somebody’s coming out of a lease term right now thinking that they’re going to have to pay 20% more than they had been paying over the last five years, well, that’s crazy. They ought to be getting a discount or at least the same amount. Whereas, if we were talking about 1999, people were coming out of their lease terms after five years and their rent was doubling. They were freaking out. Well, their broker at that time was shopping the market and searching for all the options and trying to figure out ways to reduce that cost to the minimum so that it doesn’t kill them on the bottom line.

How to structure a deal – I talked about it a little while ago, the flexibility and all the different kind of options that are out there and we didn’t even touch expansion options. There are a ton of variety of ways to expand a lease if a company’s growing. How to structure a deal is pretty important and how to come up with all the different services that are going to be necessary as part of the lease once the lease is signed.

Let’s say if somebody’s going to move, they’re going to need to talk to a mover, a phone company, an Internet/voice data company. They’re going to need to talk to all kinds of people - an attorney who is a specialist in commercial leases. All those kinds of relationships I have with a lot of people and can make those referrals to the client so that they’re not just running to the internet and trying to type in “commercial leasing attorney” and hoping they get somebody that knows what they’re doing.

Being a lease provisions expert, how to negotiation the lease language because what everybody focuses on are the dollars and cents, the rent that they’re having to pay, but ultimately that’s really only one part. If all your broker is doing is negotiating the rental amount, then you’re really losing because if you can’t translate whatever you negotiated into these leases, which are often 40 to 100 pages long, you’re really potentially setting yourself up for a fall because there could be a lot of language in that lease that could come back to bite you later on.

Those are all the kinds of things. Ultimately, we’re saving time and we’re saving money. The good news in all of this is that there’s no additional cost for our service. In fact, the rental rate that a tenant pays has all of the landlord’s costs included in it: whatever return on investment they get for having bought the building, the commission to the landlord’s broker, the legal fees, the construction cost to build out the space for the tenant and that tenant’s brokers’ fee. All of that’s included in the rental rate. If a tenant negotiates a lease directly and doesn’t use a broker, it’s sort of like paying for one without getting the benefit of it.

Now, most of my competitors will tell you that we are a free service. In one sense that’s true and in other sense it’s not. I don’t work for free. I don’t do this because I’m a charity guy. I do a lot of charitable work, but I’m not doing this. This is my for-profit business, so I’m here to pay for my kid’s college tuition and my house mortgage and everything else like you and everyone else.

We’re not free. We do get paid. It’s just that the tenant doesn’t pay us directly. It gets paid by the landlord, but it is coming out of the rent one way or another, so the tenant needs to make sure they’re getting the representation that they’re paying for in the long run.

Patrick: That’s exactly right. We want to get to get to how someone can engage with you and what they get when they do that? How would you want somebody to contact you, if they heard this show and they wanted to connect to you?

Bob: Well, they can do a couple things. The easiest thing is just to go to my website, which is www.TexasTenantRep.com. There’s a “Contact Us” button there and you can fill out that form and that’ll come right to me. Or you can send me an e-mail: just bob@texastenantrep.com. Or, of course, the phone which is (972) 468-1946. All of those are the easy ways.

The one thing I always tell people is I do a lot of public speaking on these topics. Typically my topic is “What Your Landlord Doesn’t Want You to Know,” and that’s really because of my background as a landlord I can talk about the things that landlords really would rather the tenant not know.

It’s not because landlords are bad people. I’ll say that right away. I have a lot of friends that are landlords. I was a landlord for 20 years and I wasn’t a bad person. It’s just that they have a different goal and objective. Their goal is to maximize the return on investment to their investors. The way to do that is to charge as much rent as they can at the least cost. That’s what they should be doing.

On the other hand, I should be, as a tenant agent – my fiduciary is to a tenant – I should be trying to get the best deal for the tenant, to minimize the rent and to transfer as much of the cost to the landlord as possible. The first thing whenever we engage a client is we talk about the goals and objectives we mentioned a minute ago and make sure we understand what they’re doing, make sure what kind of property they’re looking for in what location, make sure that we’re the best fit for them.

If I’m not the best solution because of some expertise location issue, I’m going to be real quick to tell the client that and refer them to somebody that I know is the best choice for them and is an expert in their particular niche of some sort.

I specialize in high-rise office buildings and warehouse and then what we call “flex” which is sort of the office/warehouse combination. You see a lot of technology companies in that. We talk about all those kind of things and we sign an Exclusive Representation Agreement. I agree to exclusively represent a tenant and not the landlord. I have no conflicts of interest.

You should never ever use somebody whose name is on a sign to represent you because they represent the landlord. You can’t trust them to represent you, too. In fact, that’s a misnomer. You can’t represent two parties in the same transaction. Make sure that the person you hire is free of all conflicts of interest and only represents tenants. In return, they’re going to want to make sure that you agree to let them represent you and that you’re not working with other brokers.

No broker that’s any good is going to work with an exclusive because they know that they can’t count on getting paid at the end of the day. You want to hire somebody on an exclusive basis. It’s in the tenant’s best interest, and you know you’re going to get somebody good who’s really going to work hard for you. It usually takes me from the time I start an assignment anywhere from six to 18 months working a deal before I get paid.

Patrick: Wow.

Bob: Yeah. So I’m not going to start down that road if I know the person is not going to commit to me like I’ve committed to them.

Patrick: That’s good. Well, Bob, I know we’re really coming down to the last 30 seconds or show of the show and I want to say thank you. Thank you so much for being on the show. Do connect with Bob at bob@texastenantrep.com or call him at (972) 468-1946.

This is Selling to the C Level and we will talk to ya’ll next week. Thanks again, Bob, and we’ll talk to ya’ll again.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

Hey Landlords, Take Care of the Basics First

Bob Gibbons (Reata Commercial Realty, Inc.) — Mon, 05 Dec 2011 11:42:36 -0800

Creativity is nice, but from a tenant rep's perspective, I want the basics done right before anything else. First, make sure that you have good marketing collateral - property brochures and as-built floor plans on all vacant spaces. Make sure the as-builts are prepared by an architect and not just hand-drawn. But I’ll take hand-drawn over nothing. And be sure that the file size isn’t so big that it can’t be emailed.

Second, have the property data kept current on all the commercial listing services - Costar, Xceligent, LoopNet, etc. - and be sure all marketing collateral is attached to your listings on those sites as well. If I'm doing a search at night or on the weekend (which I do frequently) and I can't get the brochure or floor plans because you have been too lazy to list them there, I couldn't care less about your creativity. Your creativity won't solve my problem.

One more thing about your listings, please be sure to have the rental rate or purchase price shown. Leaving that space blank or just entering "Negotiable" is incredibly annoying to tenant reps. Those listing services are set up to help us get to the properties which meet our clients' criteria quickly and avoid bothering you (the listing agent) with a client that can't afford your rates. Trust me, you aren't that good of a salesperson to be able to talk a tenant rep into adding your property to the list of options if it's priced out of our client's reach.

Third, make it easy to do business with your landlord. Quote market rental rates, expenses and tenant improvement allowances. Have a reasonable lease document which you will send me as an unprotected Word document so I can review the document and share comments with the tenant and its attorney more effectively. Respond quickly. Show up to property tours or at least leave the space open for us. When I ask for something in an RFP, respond to it. Don’t just ignore it as if it doesn’t exist. I have asked for it for a reason.

Finally, I'm happy to come to your broker party, eat your food, take your give-aways, and hopefully win a trip. But it won't make any difference when it's time to actually do a deal. I am a fiduciary to my client and no amount of wining-and-dining or bonus commissions will detract me from that responsibility. Parties and give-aways should be seen by landlords as a way to get brokers into their buildings. It’s simply a way to raise awareness of the property. It's not likely to get leased directly because of that party. And it's certainly no substitute for the basics.

Okay, that turned into a rant. Sorry about that. I was a landlord for 20 years before becoming a tenant rep so I know it’s just not that hard to make life easier on those who bring you business.

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com

What Causes Sales?

Bob Gibbons (Reata Commercial Realty, Inc.) — Fri, 02 Dec 2011 11:22:28 -0800

Yesterday, I attended a sales seminar put on by Chuck Bauer (www.chuckbauer.com). Chuck is a nationally recognized sales trainer and coach who has worked with some of the largest financial institutions in the country.

He asked the question, "What Causes Sales?" The audience threw out lots of suggestions, but no one got the answer he wanted.

Qualified Appointments!

That's what causes sales. Notice he didn't say "Appointments." He didn't say, "walking into an office to drop off a brochure for someone I think should be interested." He didn't say, "leaving messages."

He said, "Qualified Appointments."

As you know, I am a Corporate Real Estate Advisor also known as a Tenant Rep. I provide leverage to companies when negotiating an office lease or renewal with a landlord. So what would a Qualified Appointment look like for me?

My Qualified Appointment would be with an owner, CEO, CFO or top executive of a company which already leases office space in Dallas, Plano, Frisco, Richardson, Addison or the surrounding areas with 10-100 employees in that office.

That's who I really want to meet. So if I have an appointment that doesn't meet all those criteria, it isn't a Qualified Appointment. It may be a networking meeting intended to develop a referral relationship. It may be a social call. It may be a waste of time. But it's not a Qualified Appointment.

I need Qualified Appointments because I need sales. Do you?

As Chuck says, "Do What Matters."

_________________________________________________________________________

Bob Gibbons

Reata Commercial Realty, Inc. | 2222 W. Spring Creek Pkwy., Suite 210, Plano, TX 75023

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

mailto:bob@texastenantrep.com | http://www.TexasTenantRep.com