East Loop Office Space By Thomas Koelzer

Overview

The Loop is a downtown part of Chicago known for its multitude of businesses, residential condos, and high-class dining establishments and shopping options galore. East Loop is one portion of the The Loop which also has all of these great establishments and amenities for business owners, employees who work in The Loop and individuals who live there to enjoy. Commercial office space is plentiful and businesses open up quite frequently in East Loop due to the many commercial opportunities present there.

About the Residents

Those who live in this area are fortunate enough to have every amenity at their doorstep. Most residents don't even have to pull their car out of their monthly fee parking garage to get to different businesses here. Many commercial office buildings, restaurants and shops are in walking distance and provide these residents with all that they can desire. There are many condos for residents to reside within which is an optimal location for these city dwellers.

Things to Do

There is plenty to do in The Loop area. Aside from shopping and dining options, those who live in this area of the city can attend the Civic Opera House or view outdoor sculptures by famous artists. The Chicago Symphony Orchestra also plays in the area and historical buildings and museums are abound in this locale.

Business Atmosphere

It is really quite easy to get to this area as well as maneuver around this part of the city. The main interstates which will bring in commercial customers to your leased office space include I-94 and I-290. Public transportation including buses and taxis is plentiful in this area. For those who drive in to this area to do business at your commercial office building, they can find a place to park in one of the local downtown parking garages. Hotels are also quite readily available in the area so your customers who are staying in town for a few nights, after having flown into nearby O'Hare International, have plenty of choices as to where to stay.

Other Businesses

There are all different types of businesses located in this section of Chicago. From fitness chains such as L.A. Fitness to Groupon, the famous online coupon company, businesses certainly make their mark here. There are also plentiful retailers, restaurants and service providers who have bought or leased commercial office space here. Practically every type of business owner imaginable has found that the lucrative location of East Loop is ideal for their business needs.

Dining and Shopping Options

For those who prefer to dine or shop, this area offers it all. Small boutiques or large retailers can provide you with all that you want here. Restaurants with cuisines of all types line the streets providing residents and workers from local commercial office buildings with the right food to satiate their palate at any time of the day.

Tenant Issues in a Difficult Economy By David Wade McCoy

It has long been an accepted practice that a prospective Tenant should provide some financials for the prospective Landlord to review before finalizing a lease. This is simply good business practice especially if the prospective Landlord will need to spend a lot to fix up the space before the new Tenant moves in. Prospective Tenants are sometimes wary of this but actually this is good for all parties. It is miserable for everyone if the Landlord has to fight for their rent every month and no one wants to have legal battles or evictions if things are not working out.

Generally, these inquiries regarding financial stability have been one way. However in today's economy, the Tenants are not the only financial risk. Developers, which are often the owners of commercial buildings have been hit hard by the recession. Many have gone out of business and many who remain are hanging on by a thread. If a Condo Association is involved with the property, the Condo Association may also have financial risk.

Some of the problems associated with this may be minor. One Landlord having financial difficulties quit maintaining the landscaping and interior halls. The office building looked unkempt and made a bad impression. Others skimp on things like snow removal or maintaining the parking area. These things may go a while before being noticed. These problems may be annoying but are normally not critical issues.

Other problems can be real headaches. I have heard of Condo Associations with financial problems that decided to reduce their insurance. Later when there was problem, they did not have adequate coverage and the condo owners had a large assessment to cover the repairs. Another Landlord leasing 30,000 SF to an organization didn't have the money to maintain the building. This major Tenant ended up leaving because they were left with only one working bathroom for nearly 50 people. This cost the Landlord approximately $500,000 in rent per year because it didn't have enough money to fix the bathrooms.

In the most extreme case, the Landlord could go bankrupt and the property could be foreclosed upon. Should this happen, the outcome for the Tenants is uncertain. While there are some protections for the Tenants, no one wants to have to deal with these types of problems.

No matter what the issue, it is miserable for the Tenant to have to fight all the time to have the property maintained. So, it is also reasonable for a prospective Tenant to get assurances that their prospective Landlord is in good financial condition.

Presently, it is not widely accepted for the Tenant to ask the Landlord for provide financials for review. However, there are some things that you can reasonably do. Normally, I like to check public records to verify that the Landlord has paid their real estate taxes on the property, in full and on time. That is normally a very good indicator as to whether there is a problem. If the taxes have been paid and the property appears to be in good condition and well maintained, I might stop there. If however, things seem funny, I might investigate further to see if there are liens filed against the property. Finally, I might check to see if there are any pending legal actions filed against the property, which should let me know if a foreclosure action is in process.

Certainly, things can still fall between the cracks. You can do all of these checks and more and still have a problem that simply had not shown up yet. And of course, things can happen in the future that could not have been predicted. Still, hopefully, with a little due diligence, you can identify potential problems that exist currently and avoid getting into a bad situation. After all, it is certainly much easier for a Tenant to screen out a potentially bad Landlord than it is to try to deal with these frustrating issues after entering into a lease with them.

David W. McCoy is a Commercial Real Estate Broker from Louisville, Kentucky. David is licensed in Kentucky and Indiana and works with Office, Industrial, Retail and Land Properties. When David is not helping Buyers, Sellers, Landlords or Tenants, he may be running, scuba diving, biking, playing with his dogs or writing forCommercialLouisville.blogspot.com. If you would like some help with Commercial Real Estate, you can contact David at DMcCoy@ccre.biz

A Due Diligence Checklist for Commercial Real Estate Transactions By David Earl Morgan

Due diligence is the process of evaluating the commercial property that you have under contract by checking and confirming information about that property. The importance of due diligence is twofold:

First, you learn specifics about the property which enables you as the Buyer to make an informed decision.

Second, it allows you to uncover potential problems before closing escrow.

The due diligence clause in the Letter of Intent to Purchase allows the Buyer to analyze the property for a free period of time, typically 30 to 60 days.

Here is a sample Due Diligence Checklist which should be submitted as an Exhibit to the Letter of Intent to Purchase and referred to in the paragraph outlining the due diligence to be conducted.

DUE DILIGENCE CHECKLIST

PRIORITY:

____ Preliminary title report and all underlying documents
____ Existing title insurance policy and underlying documents
____ Existing survey of Property

REQUIRED:

____ Current rent roll indicating lease terms, rental rates, concessions granted, renewal options, security deposits, and any outstanding delinquencies or prepayments
____ A list of tangible personal property owned by Seller and used in connection with the ownership, operation, use and maintenance of the Property
____ Current ad valorem tax bills and property tax statements
____ Historical financial and/or operating statements for the prior three years and current year-to-date statements
____ Maintenance/service contracts and agreements and any other contracts relating to the ownership, operation and maintenance of the Property including the standard lease form, pest control, janitorial, and landscape maintenance contracts and agreements
____ Liability Insurance Policy and claims records
____ Capital expenditure records for the past five years
____ Utility bills for the preceding twenty-four month period
____ List of vendors and utility companies with account numbers
____ Certificates of Occupancy - building and tenants

OTHER:

____ Payroll summary for on-site employees
____ Phase I, II, and/or III Environmental Report
____ Reports, records, and documentation relating to Mold, Mildew and Fungus repairs made to the Property
____ All governmental permits or zoning restrictions affecting the Development and occupancy of the Property
____ Mortgage payment information (if loan is assumable)
____ Assumption papers from lender
____ Permitted and As-Built Building Plans - including Architectural, Structural, Mechanical, Electrical, Plumbing, Fire sprinklers, Landscaping and Civil Engineering
____ Floor plans
____ Site plan
____ Tenant profiles or surveys, if available
____ Traffic study or report
____ Move Out Notice(s)
____ Most recent appraisal
____ Most recent engineering report
____ Statement of structural alterations made to premises, with plans and permits
____ Guarantees and warranties on roofs, and any other portions of the structure or facilities; major repairs, etc.
____ Roof inspection reports
____ Market surveys or studies of area or comparable properties
____ Brochures of project and comparable or competitive projects
____ Any other agreements or documents that may affect the Property

David Morgan is a commercial real estate consultant and author who specializes in the sale of investment property.