Some need more space and a landlord is unable to accommodate that; a tenant may need to downsize at the end of a lease term and existing space is not easily divisible; a tenant might want to be in the newest fancy office building with more bells and whistles; or it may have a significant rent reduction opportunity through relocating. Perhaps a tenant’s way of doing business has changed and sometimes it is more efficient to move into custom-designed space vs. endure in-place reconstruction which can be quite disruptive. A new president or CFO might want to change the company image through relocation, or other factors such as public transit, restaurant and retail amenities, or client proximity might also have an impact.
In talking with my fellow office leasing specialists around the country, other than with a handful of corporations located in areas such as Houston, San Francisco, Santa Clara and the oil fracking regions, for the most part, there is almost no new office construction today. Firms are “hunkered down” and not expanding, CFOs are not jumping ship with the velocity they did prior to 2007 and 70 percent of all office tenants renew leases as a result versus relocation. This is usually a WIN-WIN for both landlord and tenant, particularly if the tenant is represented by a tenant rep specialist, as the $30 to 50/rsf (or more) cost savings (or once there is a vacancy) can be shared between landlord and tenant on the renewal. When the tenant doesn’t have its own representative, it is usually a WIN (landlord)-win (tenant) as usually the landlord pockets the lion’s share of the savings. Am I biased? You bet!
By: Jeffrey Weil
Executive Vice President | Colliers International - Walnut Creek
Jeffrey Weil is an executive vice president for Colliers International Walnut Creek. Mr. Weil has specialized in the sale and leasing of commercial properties for 38 years and has achieved CCIM, SIOR and NACORE’s Master in Commercial Real Estate Services with Honors (MCR.h) designations.
Email Jeffrey: firstname.lastname@example.org
Follow Jeffrey on Twitter: @jeffreyweil
Follow Colliers International on Twitter: @colliersintl
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