Kenmore Team Commercial | Tenant Guide

KENMORE TEAM COMMERCIAL

TENANT GUIDE PHONE: 509.735.1025 • WEB: www.kenmoreteam.com ADDRESS: 9025 W. Tucannon Ave., Ste 201, Kennewick, WA 99336

WELCOME TO THE KENMORE TEAM Whether you are leasing, buying, or selling, we have your commercial, residential and property management needs covered. Our team of specialists will provide superior service, attention to detail, and most importantly – results.

With over 87 years of combined experience as licensed Realtors in the state of Washington, we have the knowledge and understanding of what it takes to deliver. Each agent is trained to work actively to find the best possible space for you to lease and work proactively within the community to ensure satisfaction with all divisions of the Kenmore Team.

Sincerely, The Kenmore Team

PHONE: 509.735.1025 • WEB: www.kenmoreteam.com ADDRESS: 9025 W. Tucannon Ave., Ste 201 Kennewick, WA 99336

TENANT GUIDE

TABLE OF CONTENTS W E LCO M E MEET THE TEAM THE KENMORE TEAM DIFFERENCE O U R P L E D G E , YO U R B E N E F I T E X P E C TAT I O N S TENANT NEEDS & CHECKLIST WE CAN WORK WITH STEPS IN THE LEASING PROCESS LEASING TERMS T H E P R O P E R T Y YO U WA N T TENANT IMPROVEMENTS EXPLAINED BUILDING A TEAM AGENCY AGREEMENT SAMPLE

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MEET THE TEAM The Kenmore Team is a full-service Washington State real estate team assisting people with all aspects of commercial and residential leasing, buying and selling. Our team of commercial professionals includes our Managing Broker Lance Kenmore, and Realtors Scott Howell, David Fritch, and Carrie Perry. With over 25 years of real estate experience working with business professionals and organizations, commercial banks, municipal governments, general contractors, boards and commissions, our team has the skills and knowledge to ensure a wise decision from every aspect of your commercial leasing transaction.

D E S I G N AT E D B R O K E R LANCE KENMORE | REALTOR®, Designated Broker 509.727.8977 • 20 years Real Estate experience • Background in entreprenuership and new venture management • Close relationships with local business community • Business owner and investor bringing unique perspective and relationships to the table

CO M M E R C I A L D I V I S I O N SCOTT HOWELL | REALTOR®, Commercial Broker 509.379.3111 • 12 years experience in commercial lending • Background includes equipment financing, development financing, commercial financing, government financing and consulting • Close relationships with local developers and other real estate professionals • Current Real Estate activity focuses on retail, office, and property development

OT H E R K E N M O R E T E A M D I V I S I O N S

RESIDENTIAL DIVISION 509.735.1025 PROPERTY MANAGEMENT 509.820.3637 CONSTRUCTION SERVICES (LICENSED GENERAL CONTRACTOR) 509.820.3637

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TENANT GUIDE

THE KENMORE TEAM DIFFERENCE OUR TEAM APPROACH IS HERE TO GIVE YOU AN EXCEPTIONAL EXPERIENCE

COMMERCIAL SPECIALIST

Focused Attention on Tenants

SHOWING COORDINATOR

LEAD COORDINATOR

Arranges Showing Appointments

Lead Department Manager

YOU LISTING COORDINATOR

CLOSING COORDINATOR

Manages Feedback System Client Care

Lease Signing, Transaction Management, TI Coordination

MARKETING SPECIALIST Brochure and Publications Design Advertisting

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TENANT GUIDE

OUR PLEDGE, YOUR BENEFIT We will work together with you to assess different properties and options and actively search for spaces that fit your needs. During the process we offer you: • EXCLUSIVE REPRESENTATION • EXPERIENCED COMMERCIAL TEAM • PROFESSIONALISM • EXCELLENT COMMUNICATION • LOYALTY • CONFIDENTIALITY • DISCLOSURE

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TENANT GUIDE

EXPECTATIONS W H E N YO U A R E O U R C L I E N T, W E W I L L ...

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•

Provide excellence in your experience through our loyalty and exclusive representation, communication, strict confidentiality, and an experienced commercial agent supported by a team of professionals.

•

Listen and commit to giving you our best efforts in locating the right space at the best price and terms to meet your needs.

•

Guide you throughout the entire leasing process.

•

Be your advocate advisor and commercial leasing counselor.

•

Use our experience and expertise to anticipate and avoid future issues during your lease term.

•

Save you time, energy, money and reduce your stress.

kenmore Team | Tenant Guide

EXPECTATIONS A L L W E E X P E C T F R O M YO U, A S O U R C L I E N T I S TO

communicate proactively with us and be prepared to negotiate a lease if we find the right space. Being prepared involves having a clear picture of what goal you are working towards.

Here are some of the most important items we expect from you so that we can meet your needs.

• Business Plan and Goals • Business Structure • Financial Status (available cash, loans, credit score, etc.)

• Tenant Property Needs • Budget

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TENANT GUIDE

TENANT NEEDS

ur

D E F I N I N G YO U R N E E D S

house our

or the

• Property Type & Zoning • Knowing the type of property you need will allow us to find the right type of space in the an area your business is allowed. Zoning requirements within cities and counties vary.

• Location, Audience & Accessibility • Understanding your ideal customer is important if you are a retail type business looking to attract physical visitors to your location. Where are your ideal customers? If you’re looking for office or warehouse space this isn’t as important, but you will still want to find a commercial space that’s convenient for your employees or job sites.

• Desired Size & Layout • Calculate the size and determine the layout you’ll need to serve the number of expected customers or the size of your workforce.

• Budget • Monthly expenses including base rent, NNN costs, utilities, insurance • Upfront expenses including moving, deposits, prepaid rent • Tenant Improvements

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kenmore Team | Tenant Guide

Would must

like have

Would must

like have

P ROP ER T Y T Y P E

In t erior Space

Retail o Office o Medical o Restaurant o Flex o Warehouse o Industrial o Lay Down/Storage Yard o Other ______________ o

o o o o o o o o o

L oc at ion

South Kennewick o East Kennewick o Central Kennewick o West Kennewick o East Pasco o Central Pasco o West Pasco o South Richland o Central Richland o North Richland o West Richland o Benton City o Prosser o

o o o o o o o o o o o o o

E x p o s ure / Buil ding

Street Frontage o Main Arterial o Strip Mall o End Cap o Stand Alone o

o o o o o

S qua re F oo tage

<500 o 500 to 1,000 o 1,001 to 1,500 o 1,501 to 2,000 o 2,001 to 2,500 o 2,501 to 3,500 o 3,501 to 4,000 o 4,001+ o

o o o o o o o o

Sign age

Pylon Sign o Monument Sign o Exterior Façade o Windows/Doors o None o

o o o o o

1 Private Office o 2 to 3 private Offices o 4 to 5 Private Offices o 6+ Private Offices o Reception Area o Lobby o Conference Room o Kitchen/Break Room o Storage Room o Roll Up Door o Private Entrance o 20’ Ceilings o Other ______________ o Other ______________ o Other ______________ o

o o o o o o o o o o o o o o o

Pa rk ing

Off-Street o Dedicated Spaces - Qty _____ o 0 to 5 total spaces o 6 to 10 total spaces o 11 to 20 total spaces o 21 to 30 total spaces o 30+ total spaces o

o o o o o o o

Re s t rooms

Private o 1 Bathroom o 2 Bathrooms o Shared Access o Separate Men’s & Women’s o Multi-Stall Bathroom (3+) o

o o o o o o

O t her A meni t ie s

3-Phase Power o Cold Storage o Drive-thru Window o Elevator o Fire Sprinkler System o Floor Drains o Loading Dock o Rail Access o Secure Fencing o Special Ventilation o Washer/Dryer Hookup o Other ______________ o Other ______________ o

o o o o o o o o o o o o o

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TENANT GUIDE

WE CAN WORK WITH ONLINE LISTINGS OT H E R CO M M E R C I A L F I R M S P R O P E R T Y M A N A G E M E N T CO M PA N I E S P R I VAT E O W N E R S BUILDERS WINDOW SIGNS

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kenmore Team | Tenant Guide

In addition to us searching our vast resources and connections, you may see a sign, an advertisement, a listing online, or talk to a private owner of a property that looks promising. We can work with any of them on your behalf! We will gather the details, set up tours, and negotiate for you throughout the process.

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TENANT GUIDE

STEPS IN THE LEASING PROCESS IDENTIFY PROPERTIES TO U R P R O P E R T I E S SELECT PROPERTY N E G OT I AT E L E A S E T E R M S SIGN LEASE TENANT IMPROVEMENTS O CC U PA N C Y

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kenmore Team | Tenant Guide

START

LEASING PROCESS QUICK GUIDE

Consult with Commercial Agent and sign Agency Agreement

Meet with Banker for Financing

Begin Property Search

Introduction to the Kenmore Team Closing Department

LOI Accepted

Negotiate Rate and TIs via LOI

Sign Lease with Closing Coordinator

What to Bring to Lease Signing •

Driver’s License/Photo ID

•

Company Operating Agreement (if not signing as an individual)

•

Prepaid Fees in form of Cashier’s Check (Rent, Deposit, TIs, etc.)

•

Certificate of Insurance

TI Selections and Construction

Assemble Final Paperwork: Insurance, Deposit, Prepaids, Switch Utilities, Etc.

TAKE POSESSION Pick up the keys to your space!

TENANT GUIDE

LEASING TERMS GROSS LEASE (FULL GROSS) The landlord typically pays all “usual costs” that are associated with owning and maintaining the rented space. In a gross lease, the landlord may cover costs including utilities, water and sewer, repairs, insurance, and/or taxes.

MODIFIED GROSS LEASE A tenant pays base rent and takes on a proportional share of some of the other costs associated with the property as well, such as property taxes, utilities, insurance, and maintenance.

TRIPLE NET (NNN) LEASE The tenant pays building costs such as utilities, water and sewer, repairs, insurance, and/or taxes. These costs are in addition to the base rent rate and are usually charged in an annual per square foot charge. These charges vary from year to year based on the prior year’s expenses.

LEASE TERM The length of time that you will be bound by contract to lease the space for your business or organization.

This is an important component of the lease relative to negotiating TIs, lease rate, and business growth and flexibility.

LEASE RATE Landlords do not all use the same base lease rate format, so it is important to understand the structure when comparing rates for different properties. The rate can be expressed as a total monthly amount or a price per square foot. In addition, if the lease is Triple Net (NNN) then you must add the NNN rate to the base rate to calculate the total monthly rent.

• Monthly Rate Per Square Foot – Expressed rate appears as low dollar amount usually in the single digits, and the monthly rate is calculated by multiplying the rate times the total square footage of the space. For example, if price is expressed as $1.25 SF for 5,000 SF, it will amount to $6,250 per month.

• Annual Rate Per Square Foot – Expressed rate appears as a slightly higher dollar amount normally in the double-digit range, and the monthly rate is calculated by multiplying the rate times the total square footage of the space and then dividing by 12. For example, $20 SF for 5,000 SF, it will amount to $100,000 for a one-year period and $8,333 per month.

• Monthly Flat Rate – Expressed price appears as a much higher dollar amount in the hundreds to thousands and no calculations are necessary. It is the total cost for the space for one month.

LETTER OF INTENT (LOI) An agreement that summarizes the main points of a proposed deal between the landlord and tenant. It does not constitute a definitive contract but signifies a genuine interest in reaching the final agreement subject to due diligence, additional information, or fulfillment of certain conditions. A mutually accepted LOI is the outline for the tenant lease.

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kenmore Team | Tenant Guide

BUILD TO SUIT A build to suit lease is an agreement between a landlord/developer to build a commercial building that meets specific tenant requirements. Usually the landlord already owns the land or will acquire land designated by the tenant. The landlord will own the building and the tenant will in turn lease the building from the landlord.

COMMON AREA MAINTENANCE (CAM) Costs for areas in a building that are not directly leased but which are a common responsibility, such as hallways, restrooms, stairways, walkways, landscaping, and parking lots. Most landlords add CAM costs to square footage costs to calculate lease payments.

PERSONAL GUARANTEE Agreement that make one liable for one’s own or a third party’s debts or obligations. A personal guarantee signifies that the landlord can lay claim to the guarantor’s assets in case of the tenant’s default.

RENEWAL OPTION (OPTION TO EXTEND) A renewal option is part of a leasing agreement that provides the tenant the option, but not the obligation, to renew or extend a lease agreement beyond its initial terms. There can be multiple options for multiple years each. For example, you could have two options to extend three years each option. The terms of the options may be predetermined in the lease or may be negotiated at the time the tenant exercises their option. The lease will state the specific method and time period that the tenant must exercise the option.

Unless otherwise stated in the lease, the tenant is under no obligation to notify the landlord that they won’t extend and will be vacating at the expiration of the lease.

TENANT IMPROVEMENTS (TI’S) Changes made to the physical structure of a commercial or industrial property by its owner to accommodate the needs of a tenant such as floor and wall coverings, ceilings, partitions, air conditioning, fire protection, and security.

GREY SHELL Grey Shell, sometimes called cold shell, is space that is completely unfinished. Generally, it features bare stud walls, unfinished floors, and no plumbing or electrical, but does have a point of connection for sewer within the space and space for a new electrical service within the electrical room. The space may include a HVAC unit but no ductwork or controls and, if required by code, the sprinkler system may be installed but not dropped to finished ceiling height.

VANILLA SHELL Vanilla Shell offers a space with basic finishes. The finishes typically include fire taped walls ready to paint, electrical panel and outlets, sealed concrete or finished floor, finished ceiling with lighting, HVAC including duct work and controls, finished bathroom (if there is no common area bathroom), and sprinkler system, if required by code.

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TENANT GUIDE

“MOVE IN READY” A S S E E N B Y ...

THE OWNER

THE TENANT

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kenmore Team | Tenant Guide

TENANT GUIDE

TI EXPLANATION Tenant improvements (TIs) are usually necessary for a tenant moving into a commercial space, as it’s rare to find a space that meets your needs exactly. The space may be new construction and require finishing or it may be completely built out but needs to be customized. Here are some typical TI items.

• Flooring • Paint • Blinds • Electrical, plumbing, and HVAC alterations • Access or upgrades for disabilities • Dropped ceiling or exposed ceiling • Demo or remove existing walls • Build or construct walls After deciding what you want done, you and the landlord will have to agree on the details, usually through Letter of Intent (LOI) negotiations.

• Budget • Design • Contractor • Time Frame The costs for TIs should be discussed and negotiated throughout the process to determine the amount each party is contributing to the final cost. The determined amount significantly impacts what TIs are completed.

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TENANT GUIDE

BUILDING A TEAM Location is an important part of your plan, but a successful business is more than just the right building. Having advisors or experts who can offer business advice, and who you can turn to when obstacles present themselves is essential to helping your business succeed.

As you are thinking about building your team and working toward your goals, consider these types of advisors you can turn to when you need some professional advice outside of your expertise.

CO M M E R C I A L B R O K E R AT TO R N E Y BOOKKEEPER C E R T I F I E D P U B L I C A CCO U N TA N T ( C PA ) CO M M E R C I A L B A N K E R / L E N D E R INSURANCE AGENT CO N S U LTA N T S / CO A C H E S

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kenmore Team | Tenant Guide

Kenmore Team, LLC 8927 W. Tucannon Ave Ste 201 Kennewick, WA 99336 Phone: 509-735-1025 Fax: 509-735-2757

© Commercial Brokers Association ALL RIGHTS RESERVED Form: BB-1 Buyer’s Agency Agreement Rev 1/2011 Page 1 of 2

BUYER’S AGENCY AGREEMENT (Purchase, Option to Purchase, and/or Lease) CBA Text Disclaimer: Text deleted by licensee indicated by strike.

New text inserted by licensee indicated by small capital letters.

(“Firm”). Buyer hereby grants to Firm This Agreement is made by and between John Doe (“Buyer”) and the sole and exclusive right non-exclusive right (exclusive right if not filled in) to locate real property of the description below for purchase; lease; option to purchase.

1. DURATION OF AGREEMENT. This Agreement shall commence on , 20 and shall expire at 11:59 p.m. on , 20 (the “Expiration Date”).

2. DEFINITIONS. As used in this Agreement, (a) “CBA” shall mean the Commercial Brokers Association; (b) “Buyer” shall not only mean a principal who wishes to purchase real property or an option to purchase property but also a principal who desires to lease or rent real property; and (c) “Firm” shall mean and include the broker assigned to represent Buyer, any subagents appointed to represent Buyer, and the Designated Broker of the Firm identified above. The phrase “this Agreement” and “during the term hereof” include separate, written extensions or renewals of this Agreement.

3. AGENCY / DUAL AGENCY. Buyer authorizes Firm to appoint as Buyer’s Broker. This Agreement creates an agency relationship with Buyer’s Broker and any of Firm’s brokers, including Designated Broker who supervise Buyer’s Broker’s performance as Buyer’s agent (“Supervising Broker”). No other brokers affiliated with Firm are agents of Seller, except to the extent that Firm, in its discretion, appoints other brokers to act on Buyer’s behalf as and when needed.

If Property is purchased or leased from an owner represented by one of Firm’s brokers other than Buyer’s Broker (“Owner’s Broker”), Buyer consents to any Supervising Broker who also supervises Owner’s Broker acting as a dual agent. If Property is purchased, leased or optioned from an owner who Buyer’s Broker also represents, Buyer consents to Buyer’s Broker and Supervising Broker acting as dual agents. Buyer has received from Buyer’s Broker the pamphlet entitled “The Law of Real Estate Agency."If Firm acts as a dual agent, then Firm shall be entitled to both the listing and the selling office commission, plus any additional compensation Firm may have negotiated with the owner.

4. COMPENSATION. In consideration of the services to be rendered by Firm, Buyer agrees to pay Firm as follows: Retainer Fee. Buyer shall pay Firm a nonrefundable retainer fee of $ , payable when Buyer signs this Agreement. The retainer shall be credited against any hourly fee or commission to which Firm shall become entitled under this Agreement.

Hourly Fee. Buyer shall pay to Firm $ per hour for time spent by Buyer’s Broker pursuant to this Agreement, payable when billed to Buyer. Buyer shall pay the hourly fees even if Firm does not locate a property for Buyer or Buyer does not enter into a written purchase, option to purchase, or lease agreement for property located by Firm.

Commission. Buyer shall pay to Firm $ or % of the purchase price or if Buyer enters into a lease or option. This commission shall be payable if Buyer shall, during the term of this Agreement or within six months after the Expiration Date or earlier termination, enter into a written purchase, option to purchase, or lease agreement for a property that Buyer learned about during the term of this Agreement, regardless of whether Buyer learned of the same through the efforts of Firm, a third party, or through Buyer’s own efforts. If, however, Broker is granted a "non-exclusive" right to find property on Buyer’s behalf (see above), then the commission shall be payable only if Buyer shall, during the term of this Agreement or within six months after the Expiration Date or earlier termination, enter into a written purchase, option to purchase, or lease agreement for a property that Buyer learned about during the term of this Agreement through the efforts of Firm.

Buyer authorizes Firm to enter into co-operative brokerage agreements and acknowledges that Firm may use CBA to locate property for Buyer. Buyer agrees that CBA’s rules may require the owner to compensate Firm by apportioning a commission between a listing firm and Firm. If the owner compensates Firm, whether pursuant to CBA rules or otherwise, then a) Firm shall disclose that fact to Buyer; b) the compensation paid by the owner shall be credited against the compensation that Buyer is required to pay pursuant to this Agreement,

Kenmore Team, LLC 8927 W. Tucannon Ave Ste 201 Kennewick, WA 99336 Phone: 509-735-1025 Fax: 509-735-2757

© Commercial Brokers Association ALL RIGHTS RESERVED Form: BB-1 Buyer’s Agency Agreement Rev 1/2011 Page 2 of 2

BUYER’S AGENCY AGREEMENT (Purchase, Option to Purchase, and/or Lease)

(CONTINUED)

and c) Buyer shall pay the difference, if any, to Firm. If the amount paid by the owner is greater than the compensation that Buyer must pay pursuant to this Agreement, then Firm shall be entitled to keep the additional amount, less any retainer or compensation paid by Buyer to Firm.

5. EXPENSES. In addition to any compensation due Firm, Buyer shall shall not (shall not if not filled in) be obliged to pay any expenses incurred by Firm in locating property for Buyer, including but not limited to advertising; mileage or travel expenses; and the following other expenses: .

6. TERMINATION. This Agreement may be terminated in writing by either party. If this Agreement is terminated

by Buyer before the Expiration Date and Buyer is required by this Agreement to pay Firm’s expenses, Buyer shall reimburse Firm for all expenses reasonably incurred by Firm prior to termination.

7. REPRESENTATIONS AND WARRANTIES. Firm makes no representations or warranties about any of the properties that Firm may identify for Buyer, their value, or whether they will be suitable for Buyer’s intended or actual use. Firm recommends that Buyer perform due diligence investigations and inspections using parties competent to determine property value and suitability, and Buyer acknowledges that Firm does not have expertise in such matters.

8. ADDITIONAL TERMS AND CONDITIONS are attached as follows: 9. GENERAL NATURE OF PROPERTY. SIZE LOCATION: PRICE/RENTAL RANGE: TERMS: SPECIAL REQUIREMENTS: DATED this

day of

, 20

.

BUYER

Buyer/Authorized Signature

Buyer/Authorized Signature

Name:

Name:

Title

Title

Date

Date

FIRM Firm (Company) Office

By:

Authorized Representative

Date:

TENANT GUIDE

NOTES

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KENMORE TEAM COMMERCIAL

TENANT GUIDE PHONE: 509.735.1025 • WEB: www.kenmoreteam.com ADDRESS: 9025 W. Tucannon Ave., Ste 201, Kennewick, WA 99336