Leasing space is an important decision and use of resources. It’s often the lifeblood of your business – especially if you’re seeing patients or clients. There are myriad factors in determining where to lease and of course, what you’ll pay. However, it has gotten more complex in today’s environment.
Here are some considerations in approaching the leasing process:
- Know your Landlord. You need to understand who your Landlord is and what financial condition they are in. Today many properties are lender owned or involve owners with limited capital. Most brokers have excellent knowledge and data and can help navigate to save value time and hassle.
- Seize the day. It’s still a Tenant’s market in most areas so, it may be a good time to extend leases or expand while extracting maximum value from Landlords. Opportunities can change quickly submarkets with less space and minimal new development.
- Seek professional assistance. Landlords possess market insight and negotiate leases regularly. Engage a broker that specializes in representing Tenants so you can level the playing field and as well as a knowledgeable attorney help in the lease review.
- Protect your leasing rights. During negotiation you should consider requesting a subordination non-disturbance and attornment agreement (SNDA) which would require that existing lenders that sign it honor your lease in the event of foeclosure
- Get the 411 on subleasing. Sure you can get a great deal on a sublease however, you are subject to the rights of the original tenant. Negotiate with the Landlord to recognize your lease so in the event of that Tenant’s default your lease may still be honored
- Help yourself. In your negotiation you may want to request ‘set off rights’ to allow for the tenant to make repairs and pay costs if Landlord doesn’t and deduct these expenses from the rent.
- And the big one: decide to own or to lease. Consider buying space if it works for your business – have cash, stability and an understanding of future space needs. Today, Lenders like buyers that plan to occupy the space. With new lease accounting changes it may make sense to have the property as an asset.