Q. How much time should I allow to analyze renewing my lease or relocation decision?
A. As in most areas of business, the more time you leave yourself, the better decision you stand to make. If the tenant is relocating, this decision will result in the tenant needing more time to get the transaction and the desired result. Depending on the size of facility and the inventory of space in your market place, starting 8-12 mos. before is not uncommon. Renewal decisions should also begin well before the lease term end. In many cases, there is a huge benefit for the property owner to have written commitment for financial purposes. 4-6 mos. early can certainly be wise.
Q How can a broker save me money if I am going to simply renew my lease?
A. The broker should provide the comparable market conditions which result from a complete market study, this will give you the ammunition you need to make sure that your renewal lease is not abusive on the rate. Knowing what other concessions are being offered in the market place helps you get all that you are entitled in the renewal.
Q. What other areas of cost savings exist, other than the lease rate per square foot?
A. Tenant improvement allowances, escalation methods and abatements are key areas available for dollar savings.
Large companies with multiple leases can benefit from real estate consulting services like Workplace Consulting, Information Management, and Program Management. These services can be use to trend occupancy costs downward substantially. Your broker should be able to help you negotiate these items during the relocation or renewal process.
Q. Should I lease or buy?
A. The answer to this question should be answered only after careful consideration of your firms long term goals. In areas where real estate is appreciating (like Charlotte, NC) purchasing can be a very profitable approach. Consultation from a real estate broker, financial planners (CPA’s) and bankers can shed light on all of the key areas to consider before making this decision. The level of active involvement you desire with the investment should be carefully considered.
Q. What if I am short on the down payment needed to make a purchase?
A. There are several great loan programs available today. These programs coupled with SBA loans, can get small business operators into properties from 0-10% down! Many developers and investors will partner with businesses who are able to commit to lease-purchase option or land trust conveyance. Clearly, the nature of your real estate needs will dictate exactly how the deal could be structured. See your broker for details.
