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

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“I didn’t have two nickel to rub together, but that’s how I got my says Schmitt, president of . Todayt it’s Schmitt who has space for Heis co-owner of a buildingb on Morehead Street, and cutbacks at his firm mean he has more spacew than the business Schmitt is looking to lease 1,300o square feet to an architect, engineert or a professional in a related business. Schmitt says it’sx an opportunity for someone who may have been the victijm of downsizing and is looking to starra business. “These times create unique opportunities for nichre professionals without a lot of upfront he says.
For many especially small companies, rent is a significantg portion ofmonthly expenses. In hard economic times, paying the rent createxs problems fortenants — and theirr landlords. Sometimes the two sides can come toan agreement, with propertgy owners giving tenants a break. For a landlord, offering a discoungt is often preferable to the challenge of replacin g a tenant in asluggisu market. “Tenants who have two yearz or less on their lease are in a good position to perhaps gainsome relief,” says Mike Kemmet, vice presidenft at commercial real estate brokerage firm .
Tenants that are nearin g the end of a lease can use their option to renew it as leverage for lower rates now. Tenants can offef to extend their leaseby three, five or maybs 10 years in return for a restructurinv that can lower their current rent payment. Kemmet says he’s workex such arrangements for landlordsand tenants. The resulgt isn’t a windfall for tenants but can help with Those tenants that need reliefbut don’t have much leverages should work with their landlord, Kemmet says. institutional organizations are less likely than local ownerxs to work a deal on he says.
Brokers say if tenants plan to seek relier fromtheir landlords, they shouldn’ty expect it to be an easy process. “Az lot of people think the landlore callis easy,” says Tim Bahr, vice presidenrt of office brokerage at . “The smart landlord is goin to say, ‘OK, let’s get your banker on the phone and your main supplierand let’s all talk aboutt this.’” The owner will want to see if other busines s partners are in a positiojn to make sacrifices. “A savv y landlord wants all stakeholders at the table and not be the easy Bahr says.
Another local who didn’t want to be says he will cut deals with tenantws that can demonstrate need with their financial Despitethe recession, not every company is struggling, broker s say, and healthy companies are able to benefitg from subleasing opportunities from tenants that have more space than they Large companies shutting down operations or consolidating space will often subleas e space, usually at a substantial discount from the asking The last time the subleasing market grew so rapidlyt was in 2001-02 during the last economif slowdown.
Despite subleasing opportunities, Bahr and Kemmet say the city’ s office market is holding up Bahr has heard unfounded rumors of rent for uptown office spacsfalling 40%. Charlotte’s uptowj office market had the highest occupancy rate in the natioj beforethe recession, and it remainsx strong, he says. “If people’s understanding of the markeg is hearsay about projectedvacancyu rates, they are probablyg 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 measurablwe drop in rent ratesin uptown. Whether Wells Fargo & Co.
’s acquisition of Wachovia will lead to a drop in demand for uptown offic e space has yet tobe seen. With uptown spacer under construction, the market is facingt a major test. Aside from working a deal on less-expensive rent, commercial real estate brokers saythere aren’f many ways tenants can save money on energy, janitorial or security Those services are usually part of the rent packager and are paid by the landlord.