Wednesday, October 2, 2013

What Tenants Want: Trends in Office Leasing

  



 ATLANTA, GA (Oct. 2, 2013) – As the way people work continues to change, so does office space. Many companies are moving to smaller, more open offices and exploring alternative ways for employees to work, including benching and hoteling.

Michael Bull
Those were several of the points made during the most recent episode of the “Commercial Real Estate Show” radio program, hosted by Michael Bull of Bull Realty. Bull and his guests discussed office layouts, lease terms and mistakes tenants should avoid in lease negotiations.

 Nationwide, the trend of companies reducing square footage per employee continues, said Scott Panzer, vice chairman at Jones Lang LaSalle. “The last couple of years, square footage per employee has dropped to 200 square feet or less. Now there’s a push to get it under 175 square feet,” he said.

 The decrease in square footage per employee has resulted in the creation of more collaborative space, said Richard Rhodes, managing principal at Cresa Partners.

Scott Panzer
More open office layouts also have been growing in popularity. “If you look at various Jones Lang LaSalle offices throughout the country, by and large everyone has an open floor plan,” Panzer added.

 As office space has changed, so have lease terms. While tenants once focused primarily on rent abatement and tenant improvements, they now are concerned with self-help provisions, said Bob Chodos, principal at Colliers International. “The right to fix a problem and offset the cost against rent is important to tenants,” Chodos said.

Richard Rhodes
Flexibility also is important, guests said. Contraction, termination and expansion options have been sticking points, Panzer said. “Companies got burned in the past because they signed leases for too long and took too much space,” he added.

 Exercising a renewal option without re-negotiating lease terms is a common mistake that tenants make, Rhodes said. “Start the process at least 12 months ahead of when you think you need to,” he said. “Having time as leverage, particularly in a soft tenant’s market, can only work to your advantage.”

 Hiring a good advisor to negotiate lease terms on your behalf is key to getting what you want in a lease, Chodos added. “Companies who represent themselves in a process as complex as a real estate lease have a fool for a client,” he said.

Bob Chodos

The entire episode on office tenant strategies is available for download at www.CREshow.com. The next “Commercial Real Estate Show” will be available on Oct. 3 and will examine single tenant net lease investment properties.
  
For a complete copy of the company’s news release, please contact:

Stephen Ursery
The Wilbert Group
404.405.2354

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