Office Leases During a Down Economy

Despite some flickering signs of growth, today’s Fairfield County office market continues to have a high vacancy rate. Many submarkets such as Norwalk and Stamford have been affected due to decreased demand. As a result, there are a slew of properties available at rental rates 15-30% lower than they were two years ago.  This includes direct space as well as subleases at greatly reduced rents, with furniture included!

Here’s one example of a recent Choyce Peterson transaction.  Our client, the tenant, desired to reduce their square footage. Their current space configuration prevented them from remaining in their space and downsizing. Complicating matters was that at the time of their projected relocation six months remained on their current lease. After touring the market and securing proposals from several landlords, including their existing landlord, they chose to relocate within their complex. Choyce Peterson structured a new lease with:

1) the tenant’s existing obligation waived by their landlord

2) a generous amount of free rent

3) a rental rate below the ask

4) a 30% reduction in space leased

5)  a rent reduction of 59% in year one and an average rent reduction of 32% over the term of the lease

6) a full buildout designed to the tenant’s specific requirements provided and funded by the landlord

Tenants looking to downsize in today’s market can find some great deals, and those who aren’t looking may simply benefit from restructuring their lease. Interested parties should research commercial real estate brokers with tenant experience and knowledge of their local markets based on many years of service. Remember, the landlord pays the tenant broker’s commission so the whole process is a win-win situation!