Big, mission critical real estate decisions land on business decision makers’ desks every three to five years. That is the time for soul searching. Is our space meeting our business objectives? Is it being utilized efficiently? Are our employees happy about their work environment? Are we paying too much? Do we need to plan for growth? Or, the thinking du jour: can we function as a team and a brand with less space? Some businesses have a good relationship with a real estate broker who has advocated for them in the past and can brainstorm these issues continuously but most bury real estate issues until they cannot be ignored and then face an avalanche of analysis and decisions.
The decisions are more complicated today because of market turbulence that comes with a recession. There are rare opportunities that appear in scary times, but that doesn’t remove the scary part. Landlords see tenants fold up their tent and leave them with vacant space that they are very motivated to fill. Those same landlords are even more motivated to keep the tenants they have. The industry phrase is “tenant retention”. Smart landlords follow that mantra every day with professional property management, responsiveness to tenant requests, and the curation of inviting common area amenities and programmed events. But make no mistake, they are ready to negotiate attractive lease terms to keep you in their building.
As a tenant rep broker, my goal is to help the tenant make the decision that best suits their business objectives by showing them different buildings and sometimes even different submarkets. But I also realize that staying put and renewing their lease might be the best solution. And you might be surprised to learn that everything is on the negotiating table with a renewal:
· The rental rate can be negotiated down from the current level
· Free rent concessions are on the table
· Tenant improvements can be negotiated if some remodeling or refurbishing would make your space more functional and attractive.
The bottom line is that landlord’s need to offer existing tenants the same courtesy and incentives that they offer to a new tenant. In fact, the wise ones take the attitude that existing tenants get more consideration because they have earned it.