Expert advice: Lease contract advantages in the COVID-19 era
Real Estate Advisor,
Commercial Real Estate Group of Tucson
One of the lessons that business owners with Tucson lease contracts have learned from the COVID-19 disruption is that the ability to be flexible and responsive are crucial to survive. These apply right now as you assess whether you want to hang on to your current location or find new space to match the new realities of your business operations.
The reality for landlords is that they are willing to negotiate in these uncertain times. THE COST AND RISK OF REPLACING A TENANT IS SIGNIFICANT. That makes tenants valuable and worth making good deals with to keep or obtain. Show your current or any potential landlord that you are going to stay in business and options that will help you do so will open up.
Here are some of the opportunities that COMMERCIAL REAL ESTATE GROUP OF TUCSON expect will emerge and how you can take advantage:
Lower lease rates.
Landlords will be in great competition for businesses to lease their spaces. If you want to renegotiate your existing lease contract, consider short-term rent relief, blend and extend provisions, deferred rent and right-sizing. Check with your attorney, accountant or bank to see if programs that provide you additional financial support can make you a more attractive tenant.
Flexible space considerations.
Many businesses are reconsidering how much space they need. Maybe they need less because they now have a larger remote workforce. Maybe they need more to provide the distancing and barriers required to slow the spread of the coronavirus SARS-CoV-2. Maybe retooling your business operations will require a smaller footprint for a time, but an expansion in the foreseeable future. Whatever your current and future needs are, landlords will be open to tenant improvement incentives and terms that allow for expansion. Take a hard look at your space needs and alternative options to what you currently occupy. Don’t rush without methodically performing this assessment. Time is on your side and you can use market uncertainty to your advantage.
Cleanliness and distancing will be important considerations moving forward. Landlords may be receptive to your requests for additional maintenance services, air filtering systems, installation of hand sanitizing stations and other public-health strategies. Be sure, however, to closely examine the CAM BILL you’ll get in early 2021. It’s very likely that these expenses will decrease this year as certain maintenance and improvement projects are delayed. Your share of CAM costs may also change depending on tenancy of the building. You want to confirm that you are not over-paying.
Prepare to Negotiate
I always recommend that TENANTS EXAMINE ALL OF THEIR LEASE OPTIONS when facing the end of a current Tucson lease contract. Not only might you find commercial property and a new lease that work better for you, you let your current landlord know that you’re in the market for a better deal than what you currently have. This strategy is even more important as landlords face severe financial losses from businesses closures, rent abatements and fierce competition for tenants. Read and know your lease contract provisions and make contingency plans if you need to respond to continuing uncertainties.
I understand that you have lots to do to keep your business afloat and return to pre-COVID-19 success. It’s probably hard to find the time right now to take advantage of the opportunities that exist for a new Tucson lease contract.
In his 25-plus years as a commercial real estate tenant representative, Michael Coretz has picked up a wealth of information and expertise. He’s passionate about making sure that corporate users, tenants and buyers like you get a fair deal and the best solution for your business’s bottom line. Commercial Real Estate Group of Tucson specializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia. For more information, call 520-299-3400 or visit www.commercial-real-estate-tucson.com.