What is Value?


What is value?How do you know if you are getting a fair deal on your office lease?  One of the things I do for my clients is to help them understand their lease terms in context with the current market.  However, lease transactions are all different because each tenant has its own unique needs.  One thing that drives landlords crazy is when tenants chat about their rental rates.  Some landlords go as far as having confidentiality clauses in their leases to try to preempt these situations.    I feel that talking to your neighbor isn’t a bad idea but it might not be an accurate method for comparison.  Here’s an example of why.

I helped a European company open an office here in Miami and Europeans lease office space very differently than U.S. companies.  European tenants typically pay for all the construction whereas American office tenants usually do not.  The American landlord provided a standard Tenant Improvement Allowance (TI) and rental rate.  In order to hit its budget for rent, the European tenant requested no TI and an aggressive rental rate.  Since the occupancy costs to the landlord dropped dramatically, the landlord offered a below market rental rate.  Fortunately, this landlord didn’t have lender restrictions that precluded such a transaction.  Now, if you were this tenant’s neighbor and learned what he was paying compared to you, it would not have been a pleasant moment for you when you realized he was paying about 25% to 30% less than you.  But would you have been able to figure out why?

Having someone on your team that deals with office leases each and every day is key for a successful lease transaction.  You need someone like me who can help you quantify your lease terms with today’s ever changing market.  Give me a call so we can see how you compare.


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