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As seen in
BUILDINGSNY
May
27 - June 16, 2003
How to tailor your next lease and
get the most value from a tenant-driven market
by JAMES MEISKIN,
PLYMOUTH PARTNERS, Ltd.
The
best advice any company with office leasing decisions coming
up could get is to analyze their current lease first. The object
is to structure the new lease to be the most cost-effective,
learning from the particular clauses or concessions that either
helped or hurt the company in the past.
With current market conditions bringing rents and concession
packages lower than they have been for some time, squeezing
out value remains all-important. The companies that will come
out ahead are those that reduce their lease-hold expense by
instituting a thorough lease-audit strategy. Ask yourself these
questions: Is your firm fully realizing what it deserves in
concessions, whether in the form of tenant improvement dollars,
free rent or a reduction in base rent? Has your company negotiated
the most favorable escalation formula?
If your company is going to have to invest in remodeling to
maximize space efficiency, have you built in stipulations for
obligations to the landlord in the form of allowances or contributions?
Experience has shown that a good number of tenants don't concentrate
enough on how their leases are structured. Many brokers tend
to overlook this kind of detail work. The tendency is to get
the deal done, to only focus on the basic business points and
move on to the next.
Lease auditing is a specialized field that has become a valuable
tool to allow savvy tenants to manage their liability. This
service is best provided by specialists familiar with the nuances
and components that make up the lease document, such as operating
clauses, tax clauses, as well as each component from phased-in
rent increases to utility costs. These details are invaluable
in providing insights into how the next lease you sign should
be structured. For best results, it makes sense to seek and
profit from the counsel of a professional who provides this
value-added service for a living.
James Meiskin is president of Plymouth Partners, Ltd in New
York, NY.
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