Decisive Steps to Successfully Downsize

John P. Hannigan

Today’s Favorable Tenant Office Market

Area companies with leases expiring in 2023, 2024, and some in 2025 will benefit from excellent opportunities in today’s commercial real estate market. Negotiated net rental rates (when free rent is factored in) continue to hover around 15-to-30 percent below the asking rent depending on the town, building, landlord and condition of the space. Many landlords are adding amenities to their buildings in order to compete for new tenants while others are upgrading their existing package.

Landlords have become more flexible than we’ve observed in the past several years to either sign a long-term or short-term lease as well as providing significant free rent, large tenant improvement allowances, and options to expand, renew, cancel or downsize. Couple this with a glut of high-quality, lightly used office furniture, and the cards are stacked in favor of tenants.

Companies with leases due to expire within three years should carefully review the market to determine whether it’s preferable to downsize, renew, expand or relocate. Subleasing also provides an attractive alternative thanks to its compelling overall package including a low rental rate, free furniture, and in some cases newly built-out or lightly used space. Our advice? Lower your costs, upgrade your space and/or location, and take this opportunity to make your office lease flexible to meet a changing future.

Signing a lease is a dynamic decision, and once completed, it should provide flexibility via options to expand and renew, and, in some cases, contract or cancel instead of committing you to live within the four walls of your space for years to come with your lease buried in a filing cabinet.