Solutions
Kent develops real estate solutions based clients’ particular circumstances. Below are examples of actual client situations and the solutions Kent recommended
Actual Client Solutions
Situation:
Corporate restructuring restricts a client from committing to a lease beyond three years.
How should they renew their existing lease for three years?
Initiating a three-year renewal would inform the landlord that the tenant does not have an option to relocate. This would reduce the tenant’s leverage in negotiations with their current landlord.
Solution:
Renew their existing lease for five years with the option to terminate after three years. This gives the tenant the flexibility to stay beyond three years if corporate restructuring takes longer than planned or if the restructured company has similar real estate requirements. It also may provide the tenant additional lease inducements not available for a 3 year term*.
Situation:
A tenant would like to relocate, but they are unable to finance the upfront expenses of moving and tenant improvements. Unfortunately, the current leasing market does not provide inducements that will cover these expenses.
Should the tenant remain in their current premises?
Solution:
Negotiate with a new landlord to finance the upfront costs of moving and tenant improvements in exchange for higher rental rates. With financially stable tenants, some landlords are willing to shift their income stream as long as the present value of the lease remains the same. In this case, the landlord attracted a valuable long-term tenant. Securing the premises required demonstrating this value to the landlord*.
*Subject to market conditions
