Pitfalls For Tenants Without Representation
May 02, 2014
Though the outlook is improving for office occupancy rates, tenants facing renewal still have an advantage in negotiating their lease. Though it seems to be a “buyers market,” don’t assume that you have the upper hand in negotiating the best advantage.
Especially in this type of environment, having skillful, professional representation can deliver a double benefit: increasing the financial performance of your lease and reducing potential missteps that can cost time and money.
Here are several examples of the type of situations that I’ve seen in my experience.
1) A landlord who is anxious to lure tenants to their building has an incentive to agree to an (overly) aggressive timeline to secure the commitment. Tenants can be unaware of how long completing tenant improvements may take. Actually completing the improvements is restricted by the laws of physics, not to mention various laws related to permits, and the timelines of vendors, suppliers and utility companies who may be involved. An unwary or unrepresented tenant may be drawn into a situation that seems too good to be true. After costly overruns and delays, the dream has become a nightmare.
2) Though the oversupply of available office space is dwindling, there are still opportunities to improve your position in negotiating your upcoming renewal. Recently, I’ve seen tenants win rate reductions greater than 10% because it’s better for the landlord to renew than seek a new tenant. Those who don’t take advantage of strong tenant representation may be leaving money on the table.
3) Even the best lease rate can be a bad deal if your tenant improvement allowance is inadequate. Shrewd negotiations in this area are critical to the long term successful occupancy of a space. Knowledgeable representation can help determine how best to approach the landlord, and develop a strategy to gain the necessary funding for improvements. As with establishing a reasonable timeline for build out, an agreement on these matters must be reached and spelled out in writing before the lease is signed.
These are just a few examples of the value Bayshore Partners delivers to their clients. If you have an upcoming renewal or are considering a move to take advantage of available opportunities, please give us a call.
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