Lease Issues to Consider

Why Evaluate Your Real Estate Strategy?

Evaluate annually at a minimum

Most organizations review their employees’ compensation annually at a minimum. Typically, an office lease is the second largest expense for most organizations and should be evaluated at least annually.

You can renegotiate anytime

The goal of a lease for the tenant is to match their business plan as closely as possible and provide for changes in the plan as, and when, needed.

Utilize the best practices from other industries

In the 1950s and '60s homeowners would sign a mortgage and make the same payment for 30 years. Today everyone refinances (renegotiates) their mortgage as soon as any positive fluctuation in the market occurs. The professionals at Tenant Consulting have been renegotiating leases since 2002 and are prepared to put their experience to work for you.

Always retain the ability (time) to build-out new space

Negotiating any potential restructure with your existing landlord must be done while allowing adequate time to negotiate, finalize the lease, design, permit, bid-out construction and construct space (18 – 24 months at a minimum). If your landlord knows you don’t have time to move, why should they work hard to keep you?

Is Your Competitors’ Space More Or Less Efficient Than Yours?

  • A 10' × 12' office is 20% more efficient than a 10' × 15' office.
  • The square footage that you pay for in two different buildings can vary 15% or more even if it has the same size offices/workspaces.
  • If your employees were recruited by a competitor, would they have the same size space that you are now providing?
  • Do you utilize space standards by title? Do your competitors?
  • Would employees choose a larger salary/job retention over larger offices/workspaces?
  • Are you planning open landscape vs private offices?

Don’t make the “PSF” mistake

  • Asking other companies what rate they pay Per Square Foot, and then determining that your rate is fine, will lead to higher costs than necessary.
  • All things being equal, your landlord should benefit more if you renew or restructure your lease. The educated tenant will share this benefit of a lease renewal/restructure.
  • You should have an estimate of the costs the landlord would face upon your relocation: marketing time, lease negotiation downtime, rental abatement, a competitive build-out allowance, and construction costs for the new tenant. In the event your organization is content with your space’s configuration, design, and efficiency, renegotiation in place can be a favorable option. The goal is to capture the concession that the landlord would have provided to a new tenant in the event of vacancy.