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I'll omit specific names in this thread to protect the guilty...
Today at lunch I had a conversation with a restaurant/lunch spot owner about his plans to expand from one Uptown location to two. He said the plan is currently stalled due to the proposed location's landlord not willing to lower their outdated high-priced rent. The rent is apparently on par with what the space was going for a year and a half ago when the location finished construction and times were relatively good. However, it's been sitting empty since completion, and given the not-so-great times we're in now, the prospective tenant is requesting a lower rent rate (on par with other locations around Uptown, even in seemingly better locations). Fair enough it seems. So does the landlord by their admission...except for the fact that they don't want the few other businesses already on site to get wind of the lower rent rate and become upset. This would likely happen due to the fact that the space is owned by a public entity, therefore the lease agreement would be public knowledge. So this prevents the landlord from renting the space for anything less than what's listed.
I have to question the logic on this. I can completely respect the reason the landlord presents. But how does that justify letting a lease space sit empty for who knows how much longer?!?! Theoretically, unless someone comes along with a burning overwhelming desire to rent the spot for the listed high price (which is unlikely due to the economy), the space will sit empty until we're out of this thing--and by the most optimistic predictions out there, that's at least next spring! Worst case, sometime 2012! Furthermore, I thought lease rates were negotiable anyway depending on a variety of things like lease term length and (duh) the current market/comp rates?!?!
If I were renting any commercial space, I would be approaching my landlord or the management company and asking to negotiate the terms, regardless of the remaining time on the lease contract.
I assisted one of my clients w/ this recently (in another city), did the comps and came up w/ a figure and justification for it . . . my client submitted this to the management company and they agreed to lower the monthly rent.
So I would think it would only be logical that the landlord in question would be at least somewhat willing to re-negotiate existing contracts - and therefore, would have no qualms about renting the space at a reasonable market justified rate.
Maybe he is realizing some other benefit on taxes by recognizing income loss on the unrented space.
My good friend owns retail space in a neighboring town to Charlotte. He has 4 of 8 units unoccupied at the moment. I have heard him offer people a rather low price compared to other office space in the area, plus he has negotiated up to 5 months free rent on a 3 year lease arrangement. Seems like good business decisions to me. He said he can't get anywhere near what he was getting one or two years ago for the same offices.
I'll omit specific names in this thread to protect the guilty...
Today at lunch I had a conversation with a restaurant/lunch spot owner about his plans to expand from one Uptown location to two. He said the plan is currently stalled due to the proposed location's landlord not willing to lower their outdated high-priced rent. The rent is apparently on par with what the space was going for a year and a half ago when the location finished construction and times were relatively good. However, it's been sitting empty since completion, and given the not-so-great times we're in now, the prospective tenant is requesting a lower rent rate (on par with other locations around Uptown, even in seemingly better locations). Fair enough it seems. So does the landlord by their admission...except for the fact that they don't want the few other businesses already on site to get wind of the lower rent rate and become upset. This would likely happen due to the fact that the space is owned by a public entity, therefore the lease agreement would be public knowledge. So this prevents the landlord from renting the space for anything less than what's listed.
I have to question the logic on this. I can completely respect the reason the landlord presents. But how does that justify letting a lease space sit empty for who knows how much longer?!?! Theoretically, unless someone comes along with a burning overwhelming desire to rent the spot for the listed high price (which is unlikely due to the economy), the space will sit empty until we're out of this thing--and by the most optimistic predictions out there, that's at least next spring! Worst case, sometime 2012! Furthermore, I thought lease rates were negotiable anyway depending on a variety of things like lease term length and (duh) the current market/comp rates?!?!
It could be possible that this could be negotiated another way. Perhaps the LL does have a contractual agreement to hold the "rate". BUT, a lease is made up of many things that include the rate per month, water, taxes perhaps, utilities, terms, etc. etc.
If both parties really want a deal I think they need a skilled negotiator to arbitrate the terms of the lease so that each party comes out of this alive.
Maybe the LL gets his rate but the tenant gets free x for 5 years or something like this that gives balance to the parties.
If by public you mean it is owned by the city or county, call the people on the city council that represent your area i.e. the district and at large members, and complain loudly. Sometimes this does wonders for dealing with stubborn county/city departments.
I dunno, but could it be a tax deal. Some kind of a loss? There are all kinds of really wierd tax code real estate shelter deals, but without something like that, it is not rational.
lln
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