When talking to a potential tenant, many landlord brokers will share the news of a “big deal” that just closed and brag about the properties recent success. A big deal may be great for the landlord broker and the landlord, but are the terms of that “big deal” transaction beneficial to you?
As a tenant advisory firm, we are most excited about the concessions received specifically for each client, regardless of the size. Recently, we helped a smaller client (under 5,000 sq.ft.) save tens of thousands of dollars because of our understanding of the micro-market we were working in. The deal is not going to be publicized by the Pittsburgh Business Times as “The Top 20 Largest Office Deals”, but the concessions based on percentage could have been greater than any of the Top 20 deals that year. Concessions can include the rental rate, months of free rent, parking accommodations, term flexibility, etc.
The rent price is just one part of the equation but saving only $2 per square foot on a 10,000 square foot space can save $100,000 over 5 years. The cost savings can be used to hire employees, increase salaries of current employees, raise the marketing budget, the possibilities are endless. When negotiating a lease, the typical landlord’s standard lease document is written to benefit the landlord. Reviewing the lease with an attorney can uncover hidden opportunities and normally the standard lease will limit the tenant’s flexibility.
A potential client planned to sublease their space. When Found Adviosrs reviewed their lease, the sublease clause stated, “Landlord may withhold consent to sublease for any reason or no reason.” . Because the lease was not properly negotiated, the landlord controlled the sublease decision. Business terms and lease clauses can benefit or adversely affect a tenant. Building the right team with local market knowledge and legal counsel can save your company thousands if not millions of dollars in a single transaction.
Remember, big deals are meaningless unless the deal shows value for each particular tenant and their specific goals.