Frequently Asked
Questions

About ACT

Why do most landlords hold the power, when tenants control the demand?

Commercial, corporate and enterprise real estate is a huge market, “almost $15 trillion in the U.S. alone,” according to Forbes. Because landlords and owners control the assets and the cash flows, they are the participants who hold the cards and garner the most attention from BOMA and other organizations. Yet, a market is still a market, and supply and demand ultimately meet if there is transparency of information, uninhibited dissemination and price action. Businesses need space to grow their operations, and landlords need to lease if they want funds to manage their debt holdings.

What is absent now in the commercial real estate sphere is a proper balancing of tenant/buyer and landlord/seller interests. In economic terms there is almost a price floor for landlords/sellers, which must be removed by leveling the playing field for all commercial real estate participants.

What are the benefits of joining ACT?

Numerous and expansive including:

  • No-Conflict Brokerage
  • Program, Project and Construction Management
  • Lease Audit and Lease Administration Services
    • Research
    • Education
    • Knowledge Hub
    • Engagement
    • Advocacy
    • Networking

Why should I join ACT?

ACT is the first-of-its-kind organization specifically tailored for the needs of tenants and buyers. Sellers and landlords have dominated the debate on critical commercial real estate issues, and ACT will serve as the counterweight to this dynamic. ACT needs active members who want to fundamentally transform the commercial real estate industry.

Who can join ACT?

ACT is open to all stakeholders in the commercial real estate value chain that hold a commitment to tenants and sellers having an equal voice in industry matters.

What is ACT doing to protect the rights of the tenant?

ACT members and leaders are working on multiple levels to ensure that tenants and buyers finally have a coveted seat at the commercial real estate table. For decades the balance between landlords and sellers and tenants and buyers has been enormously skewed in favor of the former parties. Through education, research, advocacy and member development, ACT is putting a national face on the ignored problem of transaction and industry abuses against tenants and sellers.

When is the next ACT seminar?

The first ACT seminar will be announced in the coming days.

Is ACT a nationwide organization?

ACT’s roots are in California with designs as a national platform for tenant and buyer advocacy, information and engagement.

What is the cost to join ACT?

There currently is no cost to join – however, it is a costly endeavor to provide all of ACT’s services and education on an annual basis. ACT would be very grateful for any donations available to support their cause!

Are there networking opportunities through ACT?

There will be ongoing functions, events and seminars where members can dialogue and learn with their peers, develop contacts and grow their businesses.

About BOMA

What is BOMA?

The Building Owners and Managers Association (BOMA) International, according to the organization’s website, is “a federation of 90 BOMA U.S. associations and 18 international affiliates. BOMA represents the owners and managers of all commercial property types including nearly 10.5 billion square feet of U.S. office space.” Notice however, what is missing…the thousands of small, medium and Fortune 1000 businesses that occupy this square footage, creating jobs, delivering products and services to clients and driving the economy forward. Until now, no organization met the needs of these tenants and future buyers. In ACT, these organizations now have a voice to balance the dedicated seller/landlord interests protected by BOMA.

How do BOMA’s calculations benefit the landlord?

BOMA arrives at square footage space in a contrived manner, considering the organization prides itself on being the standard bearer of commercial real estate space measurement. Take for example, an office building calculation for tenant space. BOMA’s measurement scheme accounts for a tenant’s “useable area, the actual occupiable area of a floor or tenant,” according to the BOMA website. However, in considering the total square footage of a building on which to base a per square foot rate to charge tenants, BOMA considers: floor common areas, building common areas and major vertical penetrations in their calculations. In their own words, BOMA indicates that: “Due to the inclusion of Building Common Area, a building measured according to BOMA 1996 almost always yields higher Rentable Areas than the same building measured according to BOMA 1980.” Pure gimmicks, and the kind of tenant negative positioning that ACT is now in place to fight against.

Why do BOMA’s building measurements change over the years – if the building itself hasn’t changed?

Follow the money. BOMA is in the business of serving sellers and landlords not tenants. More square footage of space to claim is for tenants, means more dollars in rents and happier BOMA members. Tenants and buyers need ACT to defend them against these and other practices before the air above and around building is calculated as usable space.

Who joins BOMA?

A collection of the biggest names of the Fortune 500 and other large-scale entities including: “building owners, managers, developers, leasing professionals, corporate facility managers, asset managers, and the providers of the products and services needed to operate commercial properties,” according to the BOMA website. Businesses, whether large or small, are championed by ACT, as these entities are primarily landlords, investors, landlord brokers and vendors that service the landlord industry. However, it is important to have best practices, standards and advocacy in place for all parties, not just landlords and sellers.

Who funds BOMA?

BOMA has a fee-based membership roster based on the geographical affiliate a company joins, and their level and type of participation. Fees range on average from $250-$1,000.

What are the benefits of joining BOMA?

BOMA mentions several on their website including: advocacy, education, research, networking and information. ACT has similar benefit goals with even more robust features – all in an effort to stand up for the rights of the tenant.

What is the difference between BOMA and ACT?

Succinctly, BOMA is an advocate for sellers and landlords, while ACT is the voice and champion of the buyer and tenant who have for too long been unrecognized and unrepresented.

Tenant Representation

What does "no conflict of interest" really mean?

Simply put - during a commercial real estate transaction, a broker should have the interests of either the buyer/tenant or the seller/landlord…never both. A Dual Agency model places the buyer/tenant at risk of losing value in the deal. Transparency in the process and a one-to-one approach preserve and protect the fiduciary responsibility of the broker/client relationship.

What is the benefit of working with a broker, rather than working directly with the landlord?

A landlord, or his surrogate - the broker - have one mission: rent the available space, while maximizing rental price per square foot and controlling cost and expenses. A tenant needs the space too, but at the lowest price possible and with as many necessary concessions or improvements included as possible. Business owners make dozens of complex and vital commercial decisions each day impacting their operation. Legal contracts, supply chain management and financial decisions are all made with assistance and advice from experts, so why not purchasing and leasing decisions? This is perhaps one of the most important business transactions. And the best part for lessees is the service of a tenant only broker costs them nothing, and both their interests are aligned.

Should I buy or lease space?

That is a question with only two answers, but with an almost unlimited number of parameters and situations underscoring the ultimate choice. Financial conditions, growth plans, SWOT analysis, economics - the list goes and on and on. Business owners and corporate executives need to undergo a sweeping and thorough due diligence of their operations, strategies and a range of other considerations with their teams and outside experts. A commercial real estate broker specializing in only buyer and tenant representation can be one of the professionals at the table, to add their expertise and knowledge on the commercial real estate marketplace.

Who should I consult to ensure I am not being overcharged in my lease?

Of course, a tenant can trust the broker, who is representing the landlord, to negotiate the best contract deal. Far more intelligent and responsible though is to have a dedicated partner at your side during lease discussions. From price to TI’s, a tenant only representation broker is the only sound choice.

Who exposes those who are taking advantage of tenants?

Until ACT, tenants and buyers wandered in the wilderness with no trusted partner to watch out for their best interests. That environment is changing and with it, the future of commercial real estate.

I am a business owner who has no background in real estate. Who can I trust?

A legal matter requires an attorney, a tax filing requires a corporate accountant and a financial transaction requires a banker. So too, a commercial real estate professional is instrumental in helping business owners, with a limited or even vast knowledge of the commercial sector, make important lease/buy decisions. While that point seems obvious, the choice of broker should begin and end with a simple question: Who can offer the fiduciary responsibility and assurance that they are aligned with the tenant/buyer best interest? Tenant/buyer only representation is the answer if purchase or lease is the objective.

Why wouldn’t I want the landlord to complete the improvements on a “Turn Key” basis?

A Turn Key proposition sounds alluring. The space to be leased will be ready for the tenant to move in and conduct operations from day one. Often overlooked however, are the cost elements and the specificity of the space design that a particular tenant desires. A Turn Key really is about the basics, and does not cover upgrades or unique modifications to a floor plan or its elements. Turn Key might work in vary standard leases however, as a project becomes more complex, tenants should seek a Tenant Improvement (TI) allowance to create the ideal space for their needs.

What is a TI allowance?

A Tenant Improvement (TI) allowance is a total dollar sum, or per square foot calculation of the money a landlord will allocate to a tenant for specific improvements to a property space. A TI is negotiated in the lease documents and is spelled out in the TI Work Letter.