Rappaport Retail Report

Brokering. It’s a speculative and difficult job. And one whose do or die pay structure too often delineates how it is done. Doing it well demands defining and embracing the profession’s essential duality. More than finding space, more than being knowledgeable, more than being available and attentive, more than being scrupulously honest, there is one ability all successful brokers must possess. We must be diplomats. This means far more than being able to couch a potentially painful concept to someone in soft language. What we must be able to do is open the eyes of each side to the others needs, and show how small accommodations lead to implementation of larger goals. Then we must translate this clarity into a written agreement. Diplomacy then devolves in to therapy as we soothe the wounds of obstinacy inflicted during the bumpy run to the finish line of lease execution.

The question posed by some landlords, often in less than genteel tones, – “Who is paying you?” speaks to the essential issue of our jobs. The correct answer is NO ONE, unless of course, a deal is done. We are not paid to find someone for a space, or find a space for someone, but to broker a deal between two parties. We have done our job only if we get paid, and we only get paid if we bring two parties together to execute a lease. This gets more complicated when lawyers and architects enter the mix. So for landlords, the answer is, you are paying me if I get you a deal in spite of yourself. We must find the most diplomatic way of imparting the idea that just because a landlord is good at buying buildings, it does not mean that they are as good at closing leasing deals with tenants. The same holds for tenants. An owner of a retail business might have some experience doing deals and working with people. However, that does not make them a lease negotiator and closer. So the honest answer to that question is, I do not work for the landlord, nor do I work for the tenant. I work for the DEAL

Brokers must diplomatically defuse tensions that arise when emotions flare at moments of impasse. The end of the lease negotiation period is always the most difficult. Weariness of the process, and perceived slights caused by the sense of giving in too much always threaten the end game. Bringing it home then and being able to close, is what separates successful brokers from stymied ones. The key here is to get both sides so angry at you for being so persistent that any residual animosity gets deflected to you. Opposing parties become partners in getting the deal done.

We should embrace rather than avoid the duality of our role, and be able to intelligently and openly explicate it to all sides. The best analogy is to a diplomat. They are employed precisely for their skills/abilities at being able to open the eyes of both sides to the needs of the other. Diplomats clarify to their own governments how a small accommodation to the needs of another nation creates a reciprocal situation, and therefore an atmosphere of amenability conducive to agreement. Openness and honesty creates trust. And trust does deals.

Get ready for the best new concept since Mac and Cheese elevated to cult status a few years back. Sources say that soon, Nocavore, the ultimate reaction to food pretension poised as politics, will be ready to go, in an undisclosed, downtown location. Promising “Nothing Nearby, Nothing Natural, Never” they hope to be a Mecca for the many recoiling from food as foreign policy.

Ingredients from the best brands will be represented, the real heirlooms; Kraft American cheese, canned fruit from Dole, and Ham from Hormel. The menu is yet to be announced, but Spam will be in there somewhere for sure.

Nocavore promises a refreshing return to simple dining. It looks to be a huge success. After all people vote with their feet, and resent being told what to eat.

A “Good Guy Guarantee” is very simple. It is a very limited, personal guarantee.  It says, in essence, that in the event that the tenant has to break the lease, the tenant will notify the landlord, pay their rent up until the date they vacate the space, vacate the space and return the keys. Each guarantee is a bit different about the length of time for this notice, but the norm might be considered about 4 months.  If, and only if the tenant does not abide by this guarantee, the signatory will be held personally responsible. In this respect, the “Good Guy Guarantee” is a form of a limited personal guarantee. When the principal of a firm hears the words “personal guarantee,” this often scares them off. The truth is that once you realize what this guarantee is all about, it’s not something to be afraid of.   In fact, it enables a tenant to sign a longer lease, always more preferable, but with a built in escape clause.  It gives the tenant the best of both worlds.  For the landlord, this incentive helps avoid lengthy court battles with a tenant who is staying in a space without paying rent.

The guarantee puts a principal on the hook for unpaid rent, but if there’s nothing owed when the tenant leaves, the principal is free and clear and does not need to pay a penalty. All future obligations are laid on the tenant corporate entity which, if the tenant is going out of business, likely has no assets. The purpose of the good-guy provision is to provide an incentive for a tenant to leave the space instead of holding on and forcing the landlords to seek an eviction.  It provides an exit strategy that works for both sides