Ten Tips on Tenant Improvement Allowances

Tenant improvement allowances, funds provided by the landlord to improve office space, are becoming increasingly prevalent during landlord-tenant negotiations, and all companies should consider their role in creating an ideal office space. However, companies seeking to lease at least 5,000 square feet of Class A & B office space with a lease term of at least five years can exercise much greater leverage on the landlord and will typically find it easier to achieve many of the suggestions below. If in doubt, you should consult with a real estate broker to determine the feasibility of any specific item.

1.  In today’s economic environment, many landlords are providing and funding 100 percent of the building standard installations required by tenants.

2.  Tenants should try to negotiate above-standard items, such as millwork, extra HVAC, large glass walls, plush carpeting or special lighting, to get them included in the tenant improvement allowance provided by the landlord.

10 Amenities to Consider When Your Lease Expires

The expiration of your company’s lease should be viewed as an opportunity rather than a hassle. Small to mid-size tenants can make their working life a more pleasant experience by finding a location with plentiful amenities, or larger ones may even use their leverage to get amenities added to their current site.

If you’re relocating, you should tour the market to evaluate amenities; companies new to the real estate search process, because they have been locked into leases for the past 5-to-10 years, may be surprised at what today’s market offers. You can then compare locations, amenities and rental rates with your current building and make a fully informed decision. In fact, this market offers so many concessions, free rent may offset the cost of the move itself.

Here are some common amenities you may wish to seek:

5 Reasons to Prefer Renewal Over Relocation … and Vice Versa

When your lease expires, should you renew at the same location or strike out to find new space for your company?

The short answer is “both.” Even if a company is satisfied with its current space, it needs to evaluate the commercial real estate market, if only to create leverage with the landlord during negotiations.

On the other hand, every good businessperson should explore all options before reaching a final decision, and sometimes, that perfect space is sitting out there just waiting for you to find it.

Still, the debate on renewal versus relocation rages on. Here are a few of the reasons promulgated by both sides.

10 Critical Elements in Real Estate Search Process

1. Determine your requirements.

Draft a list of the pluses and minuses of your current space. Brainstorm with company executives and real estate professionals regarding the specific needs of your firm: number of offices, conference rooms, workstations, etc. Ask a professional to create a one-page lease summary of your current obligations to simplify this procedure (or visit One-Page Lease Summary).

2. Evaluate your company’s future trajectory.

Is your company growing or consolidating? What is the long-term outlook for your industry? You may wish to explore flexible arrangements with an option to expand or contract written into the lease language.

10 Tenant Qualities Office Landlords Seek

10 Steps to More Effective Lease Negotiation

Companies often look at lease negotiations as an arduous process, something to be survived rather than enjoyed. However, determining your space needs for three, five or ten years may be one of the most critical tasks you will engage in for the future of your business.

While many view a rental rate below the asking price as the most important parameter in a lease, many other business terms should be negotiated as well.

1. Free rent

Many landlords will provide two-to-six months of free rent as an inducement to secure the deal. While the main lease rate will determine the profitability of a landlord’s investment for potential buyers, free rent is viewed as a temporary condition. However, when you evaluate the overall effect, this concession can affect your average rent in a significant manner.

10 Factors to Consider When Evaluating Office Space

With the current volatility in the commercial real estate market, businesses must carefully evaluate landlord offers for new space or a renewal. Here are 10 major factors to be considered prior to reaching a decision.

1. What are your internal requirements?

There may be more than you think. In addition to the more obvious items such as space and rent, many other factors can impact your search for a new office. It’s often helpful to go through a professional checklist and brainstorm with your representatives regarding your current situation as a spur to your memory.

2. What is the geographic location?

Attracting new employees and retaining your current ones often hinges on your access to public transportation and train service as well as your proximity to major highways. In addition, your neighborhood should ideally be safe and relatively prosperous.

7 Suggestions to Avoid Common Renewal Mistakes

It’s the most common mistake made by office tenants: missing a huge opportunity — and losing truckloads of money — by negotiating their own lease renewal. More than 90 percent of companies who lease 5,000 square feet or more seek new office space with the help of real estate professionals when they are relocating or establishing a new office. 

But when seeking a renewal, that same company abandons this proven approach. They go it alone, negotiating without professional representation because they feel it’s “only” a renewal.

Approximately 80 percent of tenants who negotiate directly with their landlord simply stay in their current space without evaluating alternatives. When your landlord assumes you’re unlikely to move, your negotiating leverage is eliminated.

10 Advantages of Exclusive Tenant Representation When Renewing Your Lease

Your lease is up for renewal, and things seemed a lot simpler when your business was younger. Your landlord has befriended you over the term of your lease  … up to a point. An offer to renew  your current lease gives you pause, especially during today’s volatile economic climate.

As in all professions, specialists bring to the table a savoir faire and best practice techniques to make a difference in your bottom line. In commercial real estate, brokers with a focus on tenant representation make a difference in both fundamental approach and final outcome. Here are some of the advantages:

1. Tenant brokers know how landlords think and the best way to leverage it.

Quality brokers understand the forces driving landlord decisions and can focus on the appropriate ones to gain the best deal for their clients. This process can encompass expertise with regional markets, competition with other landlords and the ability to present their client in the best possible light.

2. Tenant brokers even the playing field.

Typically, landlords gain the upper hand in the negotiating process when tenants negotiate a renewal without a broker.  Landlords’ experience with multiple clients, knowledge of lease clauses and ability to wait out their tenants can create a significant advantage. Tenant brokers know how to separate nonnegotiable elements from a well-played bluff.

You’re one of the fortunate ones in today’s economy. Your business is growing. And thanks to the current status of the real estate market, the tenant is in the driver’s seat. However, be careful. Tenants who need to expand, with time remaining on their lease, represent one of the few cases in this type of market where the landlord has some leverage. Here are 10 issues you should consider during office expansion. 

1) Relocating in the same building

Your current landlord may be able to accommodate your growth. Location can be vital in terms of keeping your employees by maintaining the same commute, and it can also lock in some of the amenities you currently enjoy.

2) Buyout of your current lease

Though unlikely, it’s worth trying to negotiate a buyout of your current lease so you can relocate to another building.  Talk to the adjacent tenants.  Do they need space?  If the landlord is interested in negotiating a buyout, he probably has someone else in mind.