Wednesday, June 10, 2009

Office Space Leasing and Buying Expectations... set your bar!

At your next real estate event – be it a relocation, expansion/reduction, or simple lease renewal – one of your first decisions will be whether you should manage the process on your own or engage professional representation. Instead of listing the benefits of professional representation, I thought I’d illustrate with some recent real-world success stories from the technology team. As you read, you’ll get a sampling of what kind of deals and deal structures the market is offering right now. All of these transactions occurred or will occur in the current calendar year.

Midtown Relocation. We helped a technology company find Class A office space in midtown for less than $17.75 per square foot, full service. TI monies were also included, along with a period of free parking and an early termination option. Over the lease’s 3-year term, the client saved $70,000 in direct costs.

Northwest Metro Expansion. A growing office furniture sales company needed additional square footage, but their landlord did not have any space to offer. We were therefore asked to find an offsite location. A review of their existing space and lease led to different path, however. We found a single space to accommodate their full needs and negotiated a rent abatement that essentially effected a buyout of the tenant’s existing lease. Our client now has a single space that is larger than the combined footage of their old space and overflow need, they have another 6+ months to use their former space, and they’re paying roughly the same rent they had anticipated for the two disparate sites,

Northeast Metro Renewal.
A business services company was within 9 months of the end of their lease, and the economy had reduced their space needs by roughly one third. When originally approached about a space and rent reduction prior to the end of the term, the landlord offered to reduce the space size and to keep rent constant if our client would extend their term another three years. Through the Lynx process, we have succeeded in gaining the space reduction AND in negotiating a 14% rent reduction, plus one free month’s rent… with these benefits on track to begin in the 3rd quarter of 2009 (6 months prior to their anticipated lease expiration).

Short sale. We’re scheduled for closing on the sale of an office building in which the owner’s lender was seized by the FDIC. See the “Struggling Banks = Owner Opportunity” blog entry for the full story on this ongoing transaction.

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