Chris Carmen / July 7, 2016
When a business owner or manager considers relocating the business, it’s not uncommon for them to consider a number of locations to find the best fit for their business.
Although each business has its own unique needs, some variables are pretty consistent when businesses shop for office space:
- Location and access
- Condition of the building
- How well the owner maintains the property
- Matching the Image of the building with the company’s image
- Price (of course!)
The proposed rental rate of office space often becomes one of the biggest, if not THE biggest factor when a business considers relocating.
But here is something you may not know.
Even when a business has its focus on one specific property, the business often leverages a lower rate quoted by a building not being considered, in order to negotiate a better rental rate with their 1st choice.
Surprised? Then this will blow your mind.
Time to renegotiate lease? Same story. If your lease is running out but you want to stay in the same location, you are likely renegotiating your current lease. And you can use the lower rate building technique above to renegotiate your current lease…even if you have no intention of moving.
So how’s it work?
Even if you have no interest in relocating your office, going through the process of evaluating other buildings as suitable alternatives, will give you a basis for comparison with the proposed renewal. Further, and maybe more importantly, comparing alternatives will give you leverage with your landlord to negotiate lease renewal terms competitive with the market with respect to rental rate, improvements to your space, and other possible lease incentives available in the market.
It is very unusual for a landlord to not make concessions to keep a tenant. It simply makes good business sense for the owner of the building.
If the tenant vacates because the landlord wasn’t competitive with the rest of the office market, the landlord will likely have at least a few months of downtime while they search for a new tenant. Further, the landlord will have significant costs associated with making improvements to the office suite in order to accommodate the new tenant’s layout and finish needs, as well as other ancillary costs associated with leasing vacant space.
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