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.

The following list identifies ten opportunities you should consider during first and second-round negotiations as you evaluate the unique priorities for your business.
 
1. Deal numbers are now 15 to 30 percent below the asking rent.  
 
In the current market, a landlord will cut a great deal to renew an existing tenant or win a new one. Some landlords will now reduce their asking rates by 15-30% to fill open space.

2. The time is ideal to upgrade your current lease.
   
Competition among landlords can result in additional value as well as rent reduction by making the lease language more tenant-friendly. Revised clauses on subleases, restoration, operating expenses, cancellation options and expansion options can result in tangible savings.

3. Large units are available, and there is more space on the market overall.

Often, larger tenants must compromise regarding office layout or location, or incur considerable expense to modify the space to suit their needs. Today, a much larger selection of available suites reduces both search time and modification costs as opportunities abound.

4. Now is the time to upgrade amenities.

Buildings with higher quality amenities have become more affordable. Tenants can upgrade their employee services at a new site with a subsidized cafeteria, fitness center, covered parking, etc. 

5. You can lock in a favorable long-term rate.

Tenants are finding new opportunities to stabilize future costs by locking in long-term leases, resulting in below-market rents for five-to-ten years in the future. 

6. New leases include extra benefits.

In addition to lower costs and greater flexibility, landlords are more likely to include furniture, phone systems and emergency power generators to sweeten the deal and expedite your move.

7. You can expand your offices.

Obviously, if your business is expanding in today’s economy, any landlord will be especially eager to share in your success as you grow into new space.

8.  Subleasing opportunities have grown.

Bargains are available when a tenant wants to downsize and is willing to sublease the space at a discount to increase liquidity. This economy has increased the availability and variety of sublease spaces. Today, subleases are competing against other subleases as well as direct deals, thus creating pressure to further discount the rents.

9. Commercial real estate brokers can help with all of the above.

Confronted by a decline in real estate activity, commercial real estate brokers are offering expanded services to attract business. Their assistance has become especially valuable because the search and negotiation for new space, or competitive negotiations on renewals, will glean a greater advantage to the tenant than in the past.

10.  Timing.

As a result of today’s market, tenants with two years or more left on their lease can persuade landlords to trade rent for an immediate commitment to a longer term.