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Lease Build Out Issues and Requirements

Learn about the key issues involved with build-to-suit leases.

Build-to-suit leases are attractive to tenants as they allow for maximum space efficiency as space is designed to meet the specifications and needs of the specific user, and can be designed to meet certain cost-efficient energy-saving elements and to meet future expansion needs. Also, the tenant can incorporate design elements to create the desired company image. However, the build-to-suit lease also has disadvantages: they are complex transactions which require careful allocation of risks and profits between the tenant and the developer/landlord. These deals are not quick to negotiate or document. The tenant will need to make a long-term commitment to the building in order to induce the landlord to structure the lease as a build-to-suit and the lender to finance the construction. Thus, the tenant must conduct thorough due diligence, not only with regard to the title and zoning of the property, but also the ability of the developer to complete construction of the building to the agreed-upon specifications and within the critical timeline. While in other leases, the building is already in place and any additional work which is necessary for the tenant's occupancy is mainly interior improvements (or will be performed by the tenant), in a build-to-suit lease the building is not yet constructed, or requires significant renovations to accommodate the particular tenant's use; or the landlord will be solely responsible for all interior improvements and the risks as to timing and cost. The parties are sometimes working from preliminary plans in negotiating the development of the space or the entire site. Tenants are typically desiring to occupy the space to meet a critical business strategy (for example, the addition or relocation of a distribution center to address logistics needs, or a new warehouse building to satisfy inventory storage requirements of a rapidly growing business), or to consolidate functions as a cost-saving measure. In either case, the timing of completion of the building to the correct specifications is critical. As a result, the parties need to clearly understand the factors which could affect the time line for construction, completion and occupancy. This topic will help professionals involved in build-to-suit transactions understand the key issues involved in build-to-suit leases, and address practical solutions to such issues to ensure that the lease is properly structured and the issues involved in the build-to-suit transaction are considered early in the negotiating process and adequately addressed in the lease and ancillary documents.

Runtime: 93 minutes
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Why Lorman?

Over 32 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Due Diligence Scope and Timing

  • Pre-Lease Execution
  • Post-Lease Execution/Condition to Obligations

Determining the Scope of Work and Managing Risk to Landlord From Changes to the Scope of Work

  • Negotiation of Scope of Landlord's Work and Any Work to Be Done by Tenant
  • Negotiation of Phased Work
  • Tenant Design Protocols/Criteria
  • Landlord - Managing Risk of Change Orders on Timing and Budgetary Overruns
  • Tenant - Maximum Flexibility in Obtaining Changes to Scope of Work

Timing

  • Interplay of Entitlement, Permitting and Plan Approval Timing
  • Timing for Delivery and Approval of Preliminary Site Plan (If Premises Is Undeveloped)
  • Timing for Delivery and Approval of Preliminary Architect's Plans to Final Approval and Construction Drawings
  • Management of Timing Risk to Landlord and Tenant.

Costs

  • Management of Risk of Cost Overruns
  • Maximum Tenant Allowances to Control Changes; Financing of Additional Tenant Allowances
  • Determination of Rent With Reference to Final Costs

Delivery of Completed Premises

  • Phased Delivery
  • Determination of Substantial Completion

Security for Completion of Building

  • Landlord Guaranty
  • Escrows

Post-Delivery Obligations

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Why Lorman?

Over 32 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Webinar

This course was last revised on July 24, 2019.

Call 1-866-352-9540 for further credit information.

  • AIA 1.5
     
  • Lorman Business Center, Inc. is registered with the AIA Continuing Education System (AIA/CES). This 1.5 hour program offers 1.5 Learning Unit hours, which will be reported directly to the AIA/CES for AIA members.
     
  • AICP 1.5
     
  • This course has been approved by the American Planning Association for 1.5 hours of CM credit for AICP members.
     

To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.

  • Those applying for AIA and HRCI must view 100% of the program and answer the questions following the program.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

Audio & Reference Manual

  • Arizona CLE 1.5
     
  • CA MCLE 1.5
     
  • CT CLE 1.5
     
  • HI CLE 1.5
     
  • IL CLE 1.5
     
  • ME CLE 1.5
     
  • MT CLE 1.5
     
  • NJ CLE 1.8
     
  • NV CLE 1.5
     
  • NY CLE 1.5 including Areas of Professional Practice 1.5
     
  • VT CLE 1.5
     
  • WA CLE 1.5
     
  • WV MCLE 1.8
     
The CLE Code is ONLY a requirement when applying for CLE Credit in California (for participatory credit), Kansas, New Jersey or New York. Other states do not need to supply the CLE Code to apply for CLE credit.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

MP3 Download

  • Arizona CLE 1.5
     
  • CA MCLE 1.5
     
  • CT CLE 1.5
     
  • HI CLE 1.5
     
  • IL CLE 1.5
     
  • ME CLE 1.5
     
  • MT CLE 1.5
     
  • NJ CLE 1.8
     
  • NV CLE 1.5
     
  • NY CLE 1.5
     
  • VT CLE 1.5
     
  • WA CLE 1.5
     
  • WV MCLE 1.8
     
The CLE Code is ONLY a requirement when applying for CLE Credit in California (for participatory credit), Kansas, New Jersey or New York. Other states do not need to supply the CLE Code to apply for CLE credit.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 32 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Gale G. Evans

Gale G. Evans

Seyfarth Shaw

  • Partner in the Atlanta office of Seyfarth Shaw LLP with over 20 years of experience as a commercial real estate attorney
  • National practice advising Fortune 500 companies and regional developers on all aspects of leasing, acquisition, development and disposition of industrial, office and retail properties
  • Lectures on a number of commercial real estate leasing topics
  • Member of State Bar of Georgia, Commercial Real Estate Women, and International Council of Shopping Centers
  • J.D. degree, University of Georgia School of Law; B.A. degree, Emory University
  • Can be contacted at [email protected] or 404-885-6716
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Why Lorman?

Over 32 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Pay once and get a full year of unlimited training in any format, any time!

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Product ID: 402147
Published 2019
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