In the challenging world of office properties, especially post COVID-19, office tenant representatives play a crucial role in ensuring that their office tenant clients secure the best and most appropriate leases for their needs. One of the most critical responsibilities for office tenant reps is conducting rigorous due diligence. This process involves a series of investigations and considerations of the client’s requirements, in conjunction with the characteristics, features, and benefits of all properties under review. Your good practices will significantly impact both the client’s ultimate satisfaction and the success of the transaction.

1. Landlord's Financial Stability: At the top of the due diligence checklist should be a thorough examination of the financial health of each potential landlord. A landlord's financial instability can lead to a host of issues, including deferred maintenance, inability to provide promised amenities, exposure to incomplete tenant improvements, or even potential foreclosure. With many online resources now available, office tenant reps may request the landlord’s financial statements, debt obligations and credit ratings, and from the tenant’s perspective, identify signs of financial distress, such as high debt loads or consistent yearly losses.

2. Pending Financial Issues on Office Properties: Beyond the landlord’s overall financial health, office tenant representatives should delve into any pending financial issues related to specific office properties under consideration. Existing liens, pending lawsuits, unpaid property taxes, or unresolved tax disputes may create future challenges for your office tenant client. Such issues can complicate the leasing process, delay tenant improvements, or even threaten the tenant’s uninterrupted use of the leased space. In the late stages of a recent office lease negotiations, your broker co-author was required to negotiate through a landlord’s sudden non-monetary default of its loan on a significant downtown Chicago office property. The matter was eventually resolved but threatened the entire transaction.

3. Physical Condition of the Property: While the financial aspects are paramount, office tenant reps must also assess the physical state of the office properties. This involves inspecting the building’s structural integrity, inquiring about any immediate repair needs, any deferred maintenance, and ensuring compliance with local building codes and regulations. A FOIA request might be useful to ferret out code violations or open building permits. An office space might look impeccable on the surface, but hidden issues like outdated electrical systems, poor tech infrastructure, or HVAC inefficiencies can become costly problems down the line.

4. Lease Terms and Flexibility: A careful review of proposed lease terms is essential. Office tenant representatives can and should consult with their friendly competitors and SIOR colleagues (when feasible) to ensure that the proposed lease forms are not landlord centric, but offer terms favorable to their clients, from rental rates to the flexibility of space adjustments. It's also vital to negotiate clauses that protect the tenant, such as early termination options, no or limited relocation rights, or reasonable repair and maintenance provisions in case of significant disruptions.

5. Amenitites & Infrastructure: Lastly, consider the property's proximity to or inclusion of essential amenities like public transportation, dining options, fitness centers and parking facilities. While the client will provide its amenities wish list, the informed tenant rep will also note the onsite and surrounding infrastructure, such as roads and public services, which can influence an office's accessibility and overall desirability to the tenant’s employees.

In conclusion, due diligence is the bedrock of successful office tenant representation. By thoroughly investigating both the financial and physical aspects of potential office properties, and the surrounding amenities and infrastructure, office tenant reps can ensure their clients are positioned for satisfaction with their new office spaces.