How to Get a Better Lease in 2021 - Transcend Commercial Real Estate Brokerage

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March 26, 2021

How to Get a Better Lease in 2021

How to Get a Better Lease in 2021

In a recent team meeting we came across a common question many of us had been asked in the last few weeks.

 Why isn’t my landlord offering me a more aggressive deal?

It seems fair to assume that because a lot of businesses have fled their commercial space for the safety of their home offices, there would be massive discounts and desperate landlords hoping to strike generous lease terms just to keep tenants in their buildings, i.e. lower rental rates, concessions, anything! 

Unfortunately, it’s a false assumption.

While businesses may have gone remote or are working in a hybrid model, market reports show that they’re holding onto their space which means, landlords aren’t panicking about keeping tenants in the building because they haven’t jumped ship yet.

Approximately 14% of office space is available in Atlanta which isn’t drastically higher than the average vacancy rate (12%).

So, what can you leverage to swing the deal in your favor?

Negotiate Concessions

While landlords aren’t in a pinch at the moment with high vacancies and falling building value, they do need to retain as many tenants as possible. So, they may be more likely to offer concessions than a big discount on a lease agreement. 

Here are a few concessions that are commonly asked for by potential tenants:

  • Short-term free rent – a landlord may be willing to offer a period of free rent in renewal of a contract. For example, the first six months free, or the last two months of the lease period.
  • Improvement allowance – landlords may offer an extra $20 to $50 per square foot for tenant improvements, which may range from replacing flooring to adding shelving or removing interior walls, or installing a better tech stack.
  • Relocation package – if the landlord isn’t willing to alter the rental rate, they may be willing to give a move-in allowance, which can take the bite out of the relocation process and cover costs for packing and moving to the new space.
  • Reduced or waived amenity fees – this could look like free parking, or gym access.
  • Consent to sublease – If a landlord can’t offer monetary concessions, tenants may be able to secure more favorable lease terms. Consent to sublease could be a great option that allows you to ride out this wave of change until you’re ready to make a bigger move.

Sublease Your Space

This ends up being a good option if you’re planning on going back to a full-week schedule in your office someday. This allows you to keep your space, but share with another tenant a few days a week when you’re not occupying it and share in the cost. That way you keep the space you love but maximize the value of the time you have it. One downside to consider is the growing need for a seamless experience from home to the office when it comes to technology and the ability of the team to work well in a variety of locations. We’re recommending a Zoom Room buildout to most of our clients as they aim to keep flexibility, save some money on their rent every month, and ensure their team is communicating well in the process.

Go Hybrid

If you want a better lease agreement, it may be better to consider a totally new option to only pay for the space you occupy instead of holding onto an empty office two or three days a week.

We’re working with businesses in the Atlanta area now to give them great, safe, fully-equipped spaces that can be used privately just one to three days a week. No long-term commitments. No sharing space with strangers or having to book rooms. Just well-made space for the connection your team needs and none of the stuff that gets in the way of it. You can learn more here about The Landing and our Atlanta-area options.

Now’s a strange time for most decisions that would otherwise be off our radar or easy to plan for, but there are still viable options out there for you and your team to stay well-connected while saving your business money for the future.

Sources: 

CoStar 2021 Report

https://www.thebalancesmb.com/common-commercial-landlord-concessions-2866553

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