Before approaching their landlords, it’s critical that tenants first understand the landlords’ legal positions, the constraints they face and their perceived leverage under the circumstances.
Category: Lease Economics
In order to compare a deal to the market, one must have access to quality data. Maintaining a database of relevant transaction comps is critical. Comps need to include details on all variables which drive landlord returns; this includes average net rental rates over the term of the lease, as well as landlord concessions such as tenant improvement allowances, free rent, and commissions.
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.
Companies move like an organism on a daily basis: grow, shrink, move, share, and so on. But how do you facilitate this in an office building that usually requires a long-term lease obligation? Think about changes within your organization, market conditions and the way in which your employees will perform their work in the future.
It’s no coincidence that Amazon’s two HQ2 winning regions represent the top two homes for tech workers in the United States. Techies are more likely to live in New York City or the Beltway than almost anywhere else. So, in the end, Amazon went where the experts are. So what does that mean for Philadelphia’s Center City? It means we need to find our place in the world and make ourselves a destination for a few major industries.