What are the “triggers” for creating opportunities with tenant’s leases?
- Building ownership changes – This may result in delay of executing a new lease or renewal, and even change lease economics.
- Tenant Response: By renewing a lease, tenants obtain additional lease concessions such as free rent, construction allowance, relocation monies, etc. A new owner buying a building may offer more favorable lease terms to reduce their leasing risk, lower the vacancy and enhance the financing terms for the asset.
- Lease audit – Upon receiving A “true up” statement, tenants frequently discover operating expenses and real estate taxes have increased substantially and find insufficient support detail.
- Tenant Response: Engage the owner in advance of the lease expiration and negotiate to obtain needed detail and mitigate the increases and obtain more favorable future lease concessions.
- Re-measurement – Owners are re-measuring space, causing “phantom” and unexpected increases in square footage and pro rata expense allocations, ultimately increasing the escalation amount a tenant must pay.
- Tenant Response: Require the 1996 BOMA Office Standard be referenced in the lease to ensure that the landlord is not using improper, unverifiable measurements to enhance the size of the building.
A “tenant rep” leverages a tenant’s position by providing key market insight, exposing financial impact on the lease, understanding building ownership and evaluating building conditions.
Please feel free to call Hank Amabile or Mitchell Jacoby at Beacon Street Realty Advisors @ 617.775.6200