How to get the best deal on an office lease

Nathan K Smith

Austin Tenant Advisors


https://www.austintenantadvisors.com/

The landlords perception of your financial strength determines whether you get the space or the amount of concessions (if any).

Letters of recommendation◦ Former landlords, banks, colleagues with clout

How strong are your financials?◦ Personal tax returns or business plan (if sole

proprietor, llc, or small corp, or new biz)◦ Profit/loss statement, balance sheet, monthly cash

flow, etc.



It’s easy to think of building owners as rich, heartless moguls.



Best way to determine this is to ask questions◦ Are they willing to give free rent or lower rate?◦ Is there a set tenant improvement allowance?◦ Is there a preference in how they want rental rates

structured? (e.g lower rate with high increases)◦ Does the owner have the building for sale or intend

to sell or refinance or plan to renovate?◦ Cash flow or future value?

When you understand how your rent structure and lease clauses affect the landlord you earn their respect



What are comparable buildings quoting and what are they “actually” charging for rent?

How is the local economy doing?

What are the average lease rates for the building over the last 5-10 years?

Not all tenants are created equal



Whether you intend on:◦ Leasing for the first time

◦ Renewing your lease and staying

◦ Relocating your business

Always compare your existing space to other comparable options. It’s the only way to make the landlords know you are serious and compete for your tenancy



Depends on market conditions, size of your space, location, etc.

Rule of thumb: ◦ Locate 1-4 weeks

◦ Negotiate 1-3 weeks

◦ Lease Review 1-3 weeks

◦ Build out (if needed) 2-12 weeks



Don’t make the first offer and never accept the first offer



Don’t just focus on getting the lowest rent (rookie mistake). Look at the total value of the deal. That’s what landlords are looking at. (total rent for the term – free rent – tenant improvements = real costs)

Know what your rent covers◦ Who pays for electric, janitorial, taxes, insurance,

maintenance? ◦ Is it a base year or nnn?

What about after hours hvac? Do you work a lot of after hours?



Security deposit

Personal guarantees – push to limit guarantee to landlords cost (tenant improvements and other concessions, maybe relettingcosts)…..not the entire lease term.

Letter of credit



Try to cap the amount they can increase rent.

For example the Monthly Rental amount for the years during any Lease Renewal Option shall be equal to an amount not to exceed the immediately prior year’s rental amount plus an annual increase of $0.50 sf



Be aware of a clause that says that at the end of the lease premises must be returned in their original condition.



Consider asking for a Cap on management and operating fees. Tough in strong markets however worth trying



The longer the lease the more you can get



1300 Guadalupe St #250

Austin, Tx 78701

(512) 861-0525




How to get the best deal on an office lease

Real Estate

Transcript of How to get the best deal on an office lease