Choyce Tips: Aug. 2010: Every Word Matters  

Lease clauses matter for every tenant, building and deal. With any experienced landlord, every word in a proposed lease is chosen for its specific meaning and quantifies either a tangible or intangible cost. While every clause is theoretically negotiable, you should determine an individual landlord’s perspective before revealing your wish list or deal-breaker terms.  

For example, some tenants may use up all their leverage with a credit-conscious landlord just to get a proposal for office space in a building with a large security deposit. Meanwhile, they may also need an option to cancel or expand and a discounted rental rate in subsequent negotiations.

You should know the cost associated with your most critical business terms and, to a lesser extent, your wish list in all negotiations. Examples of some common cost/benefit relationships are provided below.

Choyce Tips: Aug. 2010: Your Landlord's Favorite Tenant

Even in today’s soft market, landlords only roll out the red carpet for special tenants.  Just as tenants rank the attributes of various buildings, landlords rank the attributes of various tenants.  So how do you become your landlord’s favorite tenant, and in doing so, secure the V.I.P. treatment you deserve? Here are a few pointers.

Credit, Credit, Credit

Lots of time and money is expended in finding the right tenants and getting them to sign on the dotted line. Problems collecting the rent, or even the need to evict a tenant, can become a landlord’s worst nightmare. Strong credit will trump any other attribute of equal-sized tenants. And even a weak company paying its bills may seem one setback away from default to some landlords. Thus, less creditworthy tenants should move fast when given an opportunity to lock up a deal.

Choyce Tips: June 2010: Right-Sizing

(For access to full html version, please click here.) Opinions vary widely regarding “needed” space.  President Obama has 816 square feet in the Oval Office, plus a study down the hall.  Prisoners in Alcatraz were confined to 45 square feet, and that included a bed, table, sink and toilet.  Space density for office tenants averages between three-to-four employees per 1,000 rentable square feet.  Executive areas are less densely populated, and contact centers more so. 

Too often, we observe tenants who believe they got a “great deal” only to find out it was a sub-optimal office layout as their business evolved. While a rental rate may reflect a superb market value, wasted space is wasted money. An extra 1,000 square feet at the “aggressive rental rate” of $40 per square foot translates to losing $40,000 per year.  

We always encourage our clients to evaluate the space first and rent second.  Even when you initially chose a space that’s just right, changes in your company size, budget and corporate culture may eventually make it obsolete.

Choyce Tips: June 2010: Timing is Everything

(For access to full html version, please click here.) Few occasions offer greater financial opportunities for a company than its lease renewal or relocation. Yet many tenants fail to understand the correct timing needed for proper positioning and negotiations. We say it again… real estate is a process not an event. 

By starting too early, you compromise your position by shielding your landlord from competition with others because of a lease start date too far in the future. By starting too late, you may restrict another landlord’s ability to modify alternative spaces in time to best suit your needs. 

At the very least, you should convey the appearance of a process and timing to keep all options open. Since deliberations may become long and difficult, a general timeline will also help you proceed in an organized and efficient manner.

Choyce Tips: April 2010: HVAC Solutions/Operating Expenses; A Relocation/Renewal Case Study

(For access to full html version, please click here.) A 10,000+sf client (“client 71”) recently experienced a host of problems with their existing space including an escalation of operating costs, HVAC malfunctions and leaks from the windows and ceiling. Choyce Peterson was brought on board to help them identify and evaluate alternative office locations within a five-mile radius. Relocating seemed virtually certain, but in the end, client 71 renewed. A few aspects of the process we followed were particularly instructive:

Evaluate your space (with the right team): We started with a comprehensive list of questions to jog client 71’s memory and compile every single problem with their current space. 

Choyce Tips: April 2010: Common Lease Renewal Mistakes

(For access to full html version, please click here.) Office tenant behavior frequently seems contradictory. Ninety percent of companies with at least 10,000 square feet of office space will negotiate with the landlord through a third-party broker for relocations, but forty percent fail to do so for renewals, despite their landlord’s superior experience and market knowledge.  

As a service to those choosing the latter course, below are a few points to consider when negotiating directly.

1.      Treat renewal negotiations as a process. 

Choyce Tips: February 2010: Local Market Hovering Along the Bottom

(For access to full html version, please click here.) Unlike New York City, Choyce Peterson believes the Fairfield/Westchester office space market has hit bottom. For the past 18 months, this regional market has offered high vacancy rates and low rents; however, the tide is turning. Leasing activity and competition are increasing – especially in Greenwich.

The Greenwich market has become the first to tighten, and the effect could ripple out to adjacent regions. While tenants in the Fairfield/Westchester marketplace continue to enjoy significant advantages, generous offers of free rent, below-market rental rates and large tenant improvement allowances will gradually lessen as 2010 progresses. Tenants should keep a sharp eye on activity in their respective markets to determine whether they “go Greenwich!” 

Choyce Tips: February 2010: Take Advantage of Today's Office Market

(For access to full html version, please click here.) As the economy ebbs and flows, executives are always alert for opportunities to improve their company's position in a cost-effective manner. As experts in commercial real estate for more than 20 years, we believe the current economy offers unique advantages to find new space or renew/renegotiate your current lease.

Vintage Choyce Tips: April 2004 to July 2006

Choyce Tips: July 2006: Lease Renewals: No Time for Amateurs

(For access to full pdf version, please click here.) It's the most common mistake made by office tenants: missing a huge opportunity-and risking significant dollars-by negotiating their own lease renewal.

With the help of a real estate professional, a company seeking new space typically searches the market and negotiates relentlessly for the best deal. 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.   Read More:

Choyce Tips: January 2006: What to say when your landlord says, "You can't do that."

(For access to full pdf version, please click here.) Making the most of your renewal, expansion or relocation - For businesses of any size, the lease and its related costs are critical to the success of the enterprise. In fact, your lease is likely to be the second or third largest expense of your business.

Despite this importance, most tenants negotiate a renewal and/or expansion on their own, without any objective professional input. That's music to a landlord's ears.  Read More: