Landlords willing to cut lease rates to retain tenants - Charlotte Business Journal:

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“I didn’t have two nickels to rub together, but that’s how I got my start,” says president of . Today it’s Schmitt who has space for lease. He is co-owner of a buildinf on Morehead Street, and cutbacks at his firm mean he has more spacer than the business Schmitt is looking toleasee 1,300 square feet to an architect, engineer or a professional in a related business. Schmitt says it’ds an opportunity for someone who may have been the victi of downsizing and is looking to stargta business. “These times create unique opportunities for niches professionals without a lot of upfront he says.
For many businesses, especiallhy small companies, rent is a significant portion ofmonthly expenses. In hard economic paying the rent creates problems fortenants — and their landlords. Sometimex the two sides can come to an with property owners giving tenants a Fora landlord, offering a discount is often preferable to the challengw of replacing a tenant in a sluggish “Tenants who have two years or less on their leasd are in a good positioh to perhaps gain some relief,” says Mike vice president at commercial real estatee brokerage firm . Tenants that are nearing the end of a leasde can use their option to renew it as leveragew for lowerrates now.
Tenants can offedr to extend their lease by five or maybe 10 yearxs in return for a restructuring that can lowedr their currentrent payment. Kemmet says he’s worked such arrangementx for landlordsand tenants. The resuly isn’t a windfall for tenantes but can helpwith expenses. Those tenants that need reliedfbut don’t have much leverage should work with their landlord, Kemme t says. Large, institutional organizations are less likely than locall owners to work a deal on he says. Brokers say if tenant plan to seek relief fromtheirf landlords, they shouldn’t expect it to be an easy process.
“ A lot of people thinm the landlord callis easy,” says Tim vice president of office brokerage at . “The smart landlord is going to say, let’s get your bankerr on the phone and your main supplie rand let’s all talk about this.’” The ownedr will want to see if other business partners are in a positio to make sacrifices. “A savvy landlord wants all stakeholderes at the table and not be the easy Bahr says. Another localp landlord, who didn’t want to be says he will cut deals with tenants that can demonstrate need with theirfinanciak statements.
Despite the recession, not everty company is struggling, brokers say, and healthy companiesa are able to benefit from subleasing opportunities from tenants that have more spac e thanthey need. Large companiex shutting down operations or consolidating space will oftensublease space, usually at a substantial discount from the asking rate. The last time the subleasing marketg grew so rapidly wasin 2001-02 during the last economic slowdown. Despite subleasing opportunities, Bahr and Kemmet say the city’z office market is holdin up well. Bahr has heard unfounde rumors of rent for uptown office spacrfalling 40%.
Charlotte’s uptown office markety had the highest occupancy rate in the natiomn beforethe recession, and it remains he says. “If people’s understanding of the markeft is hearsay about projectedvacancy rates, they are probably being misled,” Bahr says. “The markets are still healthy fundamentally. I haven’t seen rents go down at The economic slowdown has not yet caused a measurablw drop in rent ratesin uptown. Whether Wells Farg & Co.’s acquisition of Wachovia Corp. will lead to a drop in demane for uptown office space has yet to be With uptown spaceundet construction, the market is facing a major test.
Aside from working a deal on less-expensive rent, commercial real estate brokers saythere aren’tg many ways tenants can save moneuy on energy, janitorial or security services. Thosde services are usually part of the rent packagwe and are paid bythe landlord.