Where do you find opportunity? I happen to think that there are opportunities everywhere—so my answer is that you will find opportunity in exactly the place you look for it.
This article will explore current opportunities that the turmoil in the commercial real estate office, retail and industrial markets have created for business owners and corporate real estate executives. We will also share why the timeline for acting on those opportunities is limited and suggest that your best opportunity may be right in front of you.
As you are undoubtedly aware, the world of commercial real estate is upside down. No one can accurately predict which direction the market will move next—in fact, with so many varying opinions, the only thing that the experts can agree on is that no one really knows what is going to happen. With the lack of clear projections for the future, perhaps the safest approach is to make your next real estate decision based on clearly established facts. One undeniable fact is that commercial lease rates have fallen significantly around the country. 15% is the most gentle drop that we have witnessed over the past few years, but we have recently helped business owners sign new leases at 40% below their most recent rate (please take a minute to view our case studies file for specific details). Proactive clients are using this undeniable fact to do one of two things to improve their business: 1) Secure a much nicer location for their business at an equal or lower cost than their current arrangement; or 2) sign a new lease in their current location at a significant savings.
A recent article which appeared on Retail Traffic Magazine Online noted that requests for rent concessions have subsided noticeably since last year. In fact several, national real estate companies suggested that they have seen those requests drop by as much as 90% year over year. They suggest that “retailers who approach their landlords today are looking to have discussion about long-term strategies…” We certainly recommend that you take this approach and suggest that you grab the opportunity to do so before your landlord has provided all of the concessions that they can afford to other tenants in your building. It has been our experience that many sophisticated landlords have significant flexibility in the concessions they can provide. Their goal is to keep tenants around until the market improves. After all, if they lose you as a tenant they will have to provide just as many concessions to the next tenant.
Where should you be looking for opportunity? Right in front of you: in your office or your storefront. The decision to be made is, do you want nicer space or do you want to realize sizable monthly savings? Once you have made that decision, you will want to act on it as soon as possible.
*Special thanks go to Sam Thomas, the Real Estate Manager of the Select Family of Staffing Companies, for suggesting the article from Retail Traffic.
**Please take a minute to look at our case studies for examples of the savings you can achieve and please post your own success stories so that others can see what is attainable.