Office Lease Negotiation in a Down Economy

Despite what we read in newspapers and on the internet briefings each day about the world economy’s continued decline, business is still moving. For companies facing real estate leasing decisions in the Indianapolis commercial real estate market and on the national / international stage in general, things are moving in the right direction.

For building owners, the value of a little financial stability, in the form of credit worthy tenants, has skyrocketed. Landlords are beginning to offer significant concessions to my financially stable corporate clients at Carmen Commercial Real Estate, essentially sacrificing return for mitigating risk. Incumbent landlords are offering opportunities for tenants to renegotiate leases early to keep them from "going to the market”. Landlord’s can essentially eliminate competition for its tenants by negotiating renewal terms with tenants well in advance of the scheduled expiration. Yet, many landlords are offering aggressive incentive packages to lure tenants from competing buildings even for relocation dates well into the future.

With such an attractive “Tenant Market” environment, Tenants have to weigh the benefit of renegotiating leases or renewing leases early vs. waiting-out existing lease terms. The advantage to waiting would simply be to create a more competitive scenario by which to have landlords compete for their business. As a commercial real estate broker that specializes exclusively in Tenant Representation, representing tenants in their office lease negotiations with current or new landlords, it’s my role to advise clients how to leverage market conditions to best manage my clients’ occupancy cost. Of recent, I’ve been burning up my computer running lease cost scenarios for my clients to evaluate just that: how to take advantage of the current downturn in the U.S. economy and specifically, the local Indianapolis real estate market. Evaluate your options quantitatively. Weighing current market conditions against future market conditions isn’t as "crystal ball" as one might think; utilize the expertise and resources available to you through commercial real estate professionals.