This article as published on CoStar should be read by all area office tenants. We have included several paragraphs and a link below to the entire article.
Within the past 12 months Choyce Peterson has been successful in representing area companies whose leases were expiring within 12 to 30 months from the time we started working with them. In one case we were able to cancel a tenant’s existing lease with 24 months remaining and immediately lowered their base rent, obtained free rent, and had the landlord fund the necessary Tenant Improvements to retrofit their space to their current and future needs. In another case our client renewed and we negotiated one year of free rent, a lower base rent, and a $50.00 per square foot Tenant Improvement allowance funded by the landlord. In both cases we delivered bottom line results to our clients.
Renew or Relocate? Incumberant Landlords Willing to Sweeten the Pot
In Periods of Subbornly High Vacacies & Tight Financing, Tenancy Still the Trump Cards in Negotiations
Tenants, too, have a vested interested in staying put. While in this case, the tenant is part owner, in other cases, tenants face a disruption in their business and significant relocation and operational costs if they leave a good location. But the market reality is that there are good deals to be had out there as vacancies remain stubbornly high and money for refinancing commercial properties remains hard to come by. As a result, tenants are clearly making the decision to at least shop around.
“In sectors like the office market, we’re finding tenants taking the opportunity in a soft market to upgrade office image and pick-up additional amenities by moving from a Class B building to a Class A building, generally with minimal increases in their rent. The term you hear tossed around is ‘flight to quality,’ ” said Ryan Walsh, principal of RadatzWalsh Inc. in Edina, MN.
“To compete with the market, landlords are offering up free rent to keep tenants, somewhere around one month per year of the lease, (net or gross) depending on the situation and other terms,” Walsh said. “Also, improvement money is being spent to upgrade finishes and make spaces more functional on extensions. Usually $10 to $20/square foot for 3- to 5-year deals and some additional credits or rent reductions if the space can be used as is.”
“It is all on a case-by-case basis,” Walsh said, “but the savvy landlords factor in the costs of having the space sit vacant for a while, tenant improvements for new groups and other transactions costs. They generally come to the conclusion that it is in their best interest to work hard to keep a good tenant that they know pays rent on time.”
http://www.costar.com/News/Article/Renew-or-Relocate-Incumbent-Landlords-Willing-To-Sweeten-the-Pot/135255
