Every tenant is in a different situation, so there are no hard and fast rules. However, your representation team (both your broker and your real estate lawyer) needs to be strategic in language negotiated to clearly define the landlord right, various mechanics of exercising the right, and the limitations of the right to protect your business.
Landlords need relocation rights to maximize revenues for the building or project. This scenario occurs frequently in a newly completed building or one that is under construction and pre-leasing space. Having the ability to move a smaller tenant to another area on the same floor or to another floor in order to accommodate a larger tenant is ideal for landlords in securing tenants that may need a full floor or prefer a certain area of the building.
“If the tenant doesn’t use a broker, those fees or most of those fees don’t disappear and are still getting paid to internal and 3rd party entities and the tenant’s true savings is none or nominal compared to what they could have saved using a tenant broker.”
With the exclusion of base rent and other explicitly financial landlord concessions to the tenant, operating expense structure, definitions, and implementation thereof financially impact the tenant more than virtually any other section of an office lease. If tenants don’t negotiate and exercise their rights to conduct annual preliminary reviews to determine if a full audit is necessary, they are likely throwing money away and/or wasting the cost, time and energy of their team that negotiated optimal operating expense terms.
Operating Expense Definition – This is where the rubber meets the road. When the landlord is calculating operating expenses, this portion of the lease will dictate what is and isn’t allowed in the calculation, and will be relied upon should a dispute arise. This language should be thorough, concise, and clear.
When there are hundreds of thousands or even millions of dollars at stake in a long-term, generally fixed contract that houses the operations of your multi-million or multi-billion-dollar enterprise, preparing for relocation or renewing a lease is like preparing for your own Super Bowl. To achieve a victory, you must have the right team in place and that team—including you, the decision-maker—needs to be prepared.