Peter C. Fishbach
Commercial Real Estate & Insurance Services
727-432-6999
Office Enterprise's blog
The Magic Number is 2
For a large tenant the optimal amount of time you want to have before your lease expires is two years.
Here's how it works.
For about a year you and I, your tenant rep, need to get to know each other. Leases average five years and over that time things in your business invariably change. For example large law libraries have disappeared. Offices need fewer secretaries, if any at all. Maybe your customer base moved. Your key employees may have changed their responsibilities and live in different areas.
These and other factors can be an important input into the decision to negotiate a renewal or identify an ideal location and more efficient layout for your business. It's information that I need to know and you need to share if you want to be happiest for the next five years.
Absorption Low and Sinking
Office space absorption? is a periodic comparison measurement of the growth or shrinkage in the amount of occupied office space under lease in a specific market area. Usually space still in construction, available for sublease?, totally owner occupied and smaller single tenant buildings are not included.
Courtesy of The Maddux Report, here is a chart of absorption in the Tampa Bay area. As you can see, with the exception of Pasco County, commercial real estate space is not being absorbed. On the contrary the amount of available space is growing. Obviously, this is good news for tenants. With the increase in available space, there is more to choose from and landlords are compelled to offer it at lower rentals.
The Maddux report offers a nice recap of office space availability in its February issue. In its report it notes that many areas experienced a rise in rental rates. Maybe on paper; I suspect that most if not all rate increases have been wiped out by landlord concessions.
Tenants! This your day in the sun. This is a secular real estate opportunity that comes along once every 25 years. If your lease is coming up for renewal in the next five years, now is the time to explore options.
Putting the small print to work for you
The average length of a lease agreement is 30 pages. Every one is packed with jargon and expressed in very small print. It's mind-numbing. Familiarizing yourself with a modern lease is a long and arduous task. Operating a fulltime office leasing agencydef I feel lucky that I've had 30 years learn its tricks and traps. Believe me, there are many.
Just think. A hundred dollar oversight in the landlord's favor will cost you $12,000 over the life of a ten-year lease. How many oversights are possible in a 30-page document? Quite a few and they all potentially take money (unnecessarily) out of your pocket and put it into your landlord's.
