Landlord/Tenant Negotiations

Real Estate Advisory Services: Landlord/Tenant Negotiations

Successful businesses have processes in place that review their progress from the previous year, forecast needs and strategies for the years ahead. These meetings cover areas such as the current workforce, products, service offerings and expenses. The real estate strategy should be covered in these meetings, if not on a semi-annual or quarterly basis.

Why Is It So Important?

Running a business means you need to prepare for the unexpected. Each industry undergoes changes and real estate is no different. If your business needs less people to become more efficient, you may no longer need the space to accommodate them. Conversely, if a lack of space is holding your business back, you need to expand to meet demand from your customers.

If I Own Real Estate, What Should I Consider?

In the case of a landlord, the initial questions should be as follows:

  • Do I like my current tenants?
  • Do they pay on time?
  • Are they paying a market rent?
  • When does their lease end?
  • If I like them, how can I make sure they stay?

 

If I Lease Real Estate, What Should I Consider?

A Landlord should be looking at the market to see what other tenants are paying and how many other buildings are available. If buildings are scarce, you may have the ability to re-sign the tenant to a longer lease and raise the rent. If there ARE several buildings available, you may need to decide if you are willing to test the market for another user and lose your current tenant, or offer concessions to get the tenant to stay.

In the case of a tenant, the initial questions should be as follows:

  • Is the current building right for me?
    • Do I have the right to say? – read: renewal options
    • Is the rent fair for the market?
  • If the building doesn’t work?
    • Do I nee more/less space?
    • What other buildings are available?
    • Will I have to pay higher rent?

A tenant should also be paying attention to the market. If your current building works, you need to make sure that you can stay. That means having a lease with multiple renewal options in place. If the market gets hot and you have no remaining options, the landlord could lease to a different tenant with a higher rent and your business could be homeless. In the other scenario, buildings are plentiful and you can choose to move or negotiate better concessions with your current landlord – such as rent payments or improvements to your space.

How Cressy Commercial Can Help?

Our deep bench of professionals have relationships with landlords and tenants throughout the marketplace.  These relationships allow us to know if a tenant is considering a move or if a landlord is going to have additional space available. In addition, we track all the transactions in the marketplace to give you the information you need to make an informed decision.


Barth Chris Christopher J. Barth, Broker

574.485.1553 | cbarth@cressy.com

Christopher J. Barth is a commercial real estate broker specializing in the office market and based in our South Bend/Mishawaka offices. Mr. Barth has completed transactions in the industrial and retail markets as well. His consultative approach to client service has resulted in over $5 million dollars in transactions.

 

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