“The balance of power in negotiating a lease or renegotiating a lease in some areas is now with the tenant,” said Janet Portman.
Our sad economic times force us to rent properties that are not getting an acceptable sale price. This is not good for sellers, but desirable for tenants. Just keep in mind that tenants were “sellers” on a barrel and will not look after your place as you would. I think a contract should be drawn between the tenant and the tenant to permit inspection of premises – by appointment, once each month – the day of collection of rents seems a reasonable date. This can eliminate surprises.
Why the Commercial Real Estate Collapse Could Be a Good Thing
Your business may be able to negotiate a lower rent.
By Jonathan Weber
Posted Tuesday, November 3, 2009 – 10:58am
The great residential real estate bust has been an unmitigated disaster for most types of small businesses. Retailers have suffered as consumers adjust to the loss of housing equity. Contractors, real estate agents, interior designers, architects, and insurance agents, to name just a few, have all seen their work dry up. Entrepreneurs who financed their businesses with home-equity loans, or planned to do so, are sweating it out.
For some time, economists have expected that the next shoe to drop is commercial real estate–but in this case, there is some potential upside for small companies. Rent is usually one of a firm’s highest fixed costs, and many of us may now get the opportunity to negotiate a much better deal.
There’s plenty of evidence that the same forces—namely, easy credit—that led to the residential real estate bubble also fed significant overbuilding in commercial real estate. In many parts of the country, there are now simply more suburban office parks, malls, and expensive downtown high-rises than the market can absorb.
The financiers, in many cases, have not officially recognized this, which is why you haven’t read that much about it in the financial pages. But if, as economists such as Chris Thornberg of Beacon Economics predict, the day of reckoning is nigh, this is an excellent time to get a better deal on your space.
If you’re locked into a long-term lease, there may not be much you can do. But if you’re not, and there’s no huge reason that you can’t move, I’d suggest making a few calls to find out what comparable space is renting for. You might also try to suss out whether your building and perhaps other buildings owned by the same landlord are having vacancy issues.
Then hit up your landlord for a rent reduction. You probably want to decide beforehand whether you’re willing to back up a threat to actually move out—you’ll obviously be in a much better negotiating position if you are—but either way, there’s no harm in having the conversation.
You can read the rest of this article from The big money.
Weak rental market gives small business owners leverage in talks with landlords
Wed Oct 14, 8:20 PM
Joyce M. Rosenberg, The Associated Press
NEW YORK – While small businesses are still struggling in this weak economy, many are catching a break when it comes to negotiating with landlords.
The weakness in the commercial real estate market comes in part from high vacancy rates in many parts of the country. And many landlords are increasingly willing to cut a deal with renters so they can keep their buildings occupied.
“The balance of power in negotiating a lease or renegotiating a lease in some areas is now with the tenant,” said Janet Portman, an attorney and co-author of “Negotiate The Best Lease for Your Business.” “If the market is awash with space, then you can assume the competition will be tight for rents and you’re going to have some real clout.”
Even companies whose leases aren’t up for renewal can get better terms, Portman said. She noted that in many states, a commercial tenant breaking a lease ends up responsible only for the months that a property is vacant. So a business that breaks its lease and moves to a much cheaper space can end up saving money. That’s likely to make many landlords willing to lower rents or agree to other terms to avoid losing money.
But Portman also said owners need to be careful about properties where landlords may be too eager to lower their standards to get tenants. A building that is filled with struggling companies that ultimately can’t pay their rent is going to turn into a ghost town and be a less desirable location of the remaining tenants.
Portman also warned that small businesses that are struggling probably won’t be able to cut a better deal.
“Even a landlord who’s desperate to rent isn’t going to take a chance on a tenant who’s got a bad track record,” she said.
Owners who are searching for space learn to develop a strategy, especially when they’re dealing with landlords who still think they can get the rents they want.
You can read the rest of this article at Yahoo News
Soaring vacancy rates, falling rents and a dramatic surge in incentives in emea office property mark
The office property market in Europe, the Middle East and Africa has seen a sharp increase in vacancy rates, a decline in rental levels and a dramatic increase in tenant incentives in the first half of 2009, according to analysts.
The latest international overview of 68 office markets in 37 countries across the region from Colliers International indicates how each market is fairing and the picture is mixed.
Major falls in rental levels in Dubai and Moscow, combined with the strengthening of sterling, have put London’s West End once again at the top of the table as the most expensive office market in the region.
With continuing economic troubles throughout the region and weak demand for office space, the vacancy rate across the EMEA region rose to 9.7% by the middle of the year, an increase of almost 2% during the first six months of the year, bringing the EMEA vacancy to its highest level since the end of 2004.
You can read the rest of this article from PropertyWire