Business Facilities - February 2008 - (Page 47)

FEATURE STORY By Steve Golding, President and COO, Jackson-Shaw NEGOTIATE a LEASE in Today’s Real Estate Environment We turned to a real estate industry expert to get the inside scoop for you on how to navigate the lease negotiation process for your next project. How to Successfully T oday’s real estate environment can make the lease negotiation process challenging, but navigable, if you balance your company’s needs with the issues facing many landlords. Your prospective landlord is probably concerned about the same things you are: the threat of a national economic recession, increasing operating and occupancy costs, increasing construction costs of new buildings and tenant improvements, and the lack of financial liquidity in the debt markets. At the same time, the last few years in the real estate market have generally been good ones for most real estate owners, which means many are not yet at the point of thinking about dramatically reducing rents. Clearly defining your needs, understanding market forces, and finding common ground on the details are all essential to successful negotiations and can result in a lease that is favorable for both your company and your prospective landlord. Here are some of the finer points to consider as you enter you next lease negotiation. UNDERSTAND YOUR SPACE REQUIREMENTS Not all real estate is created the same; it is important to evaluate your space requirements and how they match up with—or limit—your choices. Here are questions to consider when trying to fulfill your space needs: What is your budget? Is your existing space sufficient to meet your needs? What building features are essential for the operation of your business? Is visibility from or access to a major road necessary? Are you subject to “green building” requirements, or will this be a requirement in the future? Equally important to understand is how the space will impact your employees. What are the area amenities that are important to your employees? What amenities will attract the top talent in your industry? Will the space help employees be more productive? Access to the build- ing, newer space, better lighting, and safety issues all affect employees’ daily productivity and play an important role in site selection, rental rates, and tenant improvement negotiations. Keep in mind that too many special requirements can limit your site selection options and negotiating power. If the features and amenities you require are not readily available at other competing properties, you will likely pay more for the space. TENANT IMPROVEMENTS Tenant improvement costs have dramatically increased over the last couple of years. For new, unfinished space, you can expect that the level of finish you desire is going to cost 20% to 50% more than it would have just two years ago. In some cases, the developer may not have enough money in the budget to finish out the space beyond a reasonable minimum requirement. BUSINESS FACILITIES 47 PHOTO CREDITS: PHOTODISC/JUPITERIMAGES

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Business Facilites - February 2008 Contents First Word Snapshots Corporate Moves: Texas Capturing the Creative Class Green with Energy Automotive Opportunities in a Green Economy Corporate Moves: Wyoming Metro Spotlight: Overland Park, KS Metro Spotlight: Long Island, NY Get Ahead in Alabama Indiana: Sending Tech Messages How to Successfully Negotiate a Lease in Today's Real Estate Environment Legislation Spurring Innovation in Kentucky New Center will Propel Ontario's Automotive Future Virginia's Vital Signs Eating Well in the North of France Advertiser Index Ask the Expert

Business Facilities - February 2008

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