CHIEF: Hello and welcome to ACME. I’m the Chief, but you can call me, well, the Chief. We’re in the business of tracking down commercial real estate thieves and we’re ultimately after one, Carmen Sandiego. Every creep we’ve ever collared has been working for her. Now, when you report for duty, I assign you a case. You go to the scene of the crime and look for clues about where the crook took the loot. Then, the chase begins! Any bystander is a potential witness who can point you in the right direction. When you finally catch up with the crook, you stop to bust ‘em! But remember, you can’t arrest a crook without a warrant. And you can’t get a warrant if you don’t know anything about the crook.
We know security is tight at these commercial real estate properties. Find out who the crook was: their role and their employer. And of course, find out where they went. Now, I could tell you lots more, but the best way to learn a job is on the job. So, are you ready for your first case?
CHIEF: Downtown Toronto is facing a noisy nightmare. Someone stole Commerce Court’s building system. Where once people enjoyed the near silence of automated visitor management, felt good and saved money with sustainability features, and easily accessed their exclusive tenant portal, they’re now stuck with four walls that are just... four walls. People inside are louder than ever, with broken and beeping security systems, tenants calling and complaining to property management, and bewildered leasing teams asking for help from anyone who will listen. Not to mention that the BOMA awards are in just a few weeks! Heads down and pick up the chase because those systems won’t get online until you solve this case. Step on it!
TOUR GUIDE: Welcome to downtown Toronto! Near Old Town, you’ll see the Commerce Center. With structures built in 1931, this historic building complex is a mixed use property, hosting an abundance of retail and office tenants.
YOU: How does leasing work by tenant type?
TOUR GUIDE: Great question! Let’s start with office leases. Office lease terms vary greatly. Historically, these leases had a term of 10 years or more. With the advent of coworking, office lease terms shrunk and are now often 3 to 10 years. Coworking spaces offer leases even shorter, by the day or even the hour. Retail leases vary and depend on the tenant’s long or short-term desire to stay in that location. Most retail lease terms stay between 3 to 5 years. For rental rates, retail is almost always more expensive. The tenant sells in-person to the customer, after all! That’s the price of visibility.
Now onto lease structure. For retail, you’ll most likely see a triple net lease (NNN) or a percentage rent lease. A triple net lease means that in addition to rent, the tenant will pay property taxes, insurance, and common area maintenance. A percentage of rent lease means that instead of a set rent number, the tenant pays the landlord a percentage of their gross revenue as “rent”. Other common commercial lease structures include a full service (gross) lease, single net (or double net) lease, and a modified gross or net lease. Once again though, the lease structure varies depending on the property and the tenant.
You won’t see percentage rent on office, that’s for sure! But you will see tenant improvement dollars, also referred to as TIs. That’s when the landlord gives you money to finish out the office space to your specifications. Many office landlords also create what are called “spec suites”, ready-to-go offices so that tenants don’t need to spend loads of time designing their space. Instead, tenants’ employees get right to work.
YOU: What is a mixed use property?
TOUR GUIDE: A mixed use property is any combination of multiple property types within one property. Common property types within mixed use include: multifamily, office, retail, and industrial. Common combinations for mixed use include: multifamily and retail; office and industrial; office and multifamily (or residential, such as condos). Some people will only call a property mixed use if it includes a residential or multifamily component.
YOU: Thank you, goodbye.
YOU: Where did the suspect go?
BYSTANDER 1: “If I only had a dime for every dollar”, she said. “I’d have better murals—I mean morals.”
YOU: Tell me about the suspect.
BYSTANDER 1: She was dressed for success in a full suit. I heard her talking on the phone about an annual meeting.
YOU: Where did the suspect go?
BYSTANDER 2: “I’m wedged between a rock and a hard place”, she told me, smelling a little too fermented for my taste.
YOU: Tell me about the suspect.
BYSTANDER 2: A pamphlet fell out of her laptop bag. It was a tour presentation of nearby office properties that she wrote.
[NOTES]: The crook is a she, and she’s certainly not working a construction site wearing a full suit! She’s probably not a developer, architect, or property manager, because they don’t typically have annual investor meetings. Brokers, insurers, IT firms and other commercial vendors don’t have annual investor meetings either. If she’s giving tours, then she’s probably not on the investment, aka acquisitions, team. Often asset management, portfolio managers, or IR (investor relations) teams give tours. Aha! Investor relations also runs annual investor meetings. I bet she works for a private equity fund manager or a REIT.
[NOTES]: It sounds like she went somewhere that has a percentage rent lessee, a retail tenant. The building has a mural and is a wedge shape. The tenant serves alcohol. I bet it’s the triangular-shaped Flatiron Building… and she’s headed back to the pub. Probably needed some liquid courage to pull off the heist, as this is certainly not a typical day-in-the-life for an IR person.
CHIEF: Congratulations on the warrant! Now, don’t lay on your laurels. Go get her.
CHIEF: Nice detective work. You’ve upheld ACME’s standard of excellence. And with only two interviews, at that! You put Barb Dwyer behind barbed wire. Not to mention a steel fence, reinforced doors, and a pack of guard dogs. We went through hours of questioning with no luck. But, just before the cell doors slammed shut, we heard the crook shout, “I’ll steal the building’s treasures until there’s nothing precious left!” Code, perhaps? I’m faxing it to you for further reference.
Don’t put your feet up yet! I’ve got another case for you. Are you ready to take it?
Thank you for playing this game with me. I hope you enjoyed my silliness as much as I did. For some disclaimers: this is a work of fiction. I shamelessly borrowed in homage to the classic game, “Where In The World Is Carmen Sandiego?” Names, characters, business, events and incidents are the products of either the Broderbund video game creators’ or my imagination. While I used real properties and roles, I fictionalized details. Many thanks to Thano Lambrinos for giving my ULI council a tour of Commerce Court not too long ago. With gratitude, I used their property as the focal point, the scene of the crime. Finally, IR professionals are some of the least likely crooks in our industry. Any resemblance to actual persons, living or dead, or actual events is purely coincidental. Below is the YouTube content from which I used screenshots.
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