Welcome to the first entry of the O’Donnell Commercial Real Estate blog. The intent of the blog is to provide useful information to all parties involved in the commercial real estate process, whether you are a company looking for a new location or a landlord leasing space. We welcome your comments to our blog and look forward to providing you with weekly entries focusing on various parts of the commercial real estate industry.
It’s no secret. The economy is still not up to par. With holiday sales not hitting their mark and unemployment still at record high, businesses are continuing to feel the effects of an economy in recession. Many company leaders are looking for alternative ways to cut costs, that won’t affect the staff they have come to appreciate so much. Second only to payroll, real estate always ranks amongst the top expenses on a business’s checkbook. We’ve come up with three ways to potentially save you money in this department.
1. Renegotiate your lease. The good thing about the economy we are in, is that it provides tenants with the upper hand when it comes to leasing space. Landlords are hungry for tenancy and will most likely cut deals to gain tenants or keep them longer. With that said, now is the ideal time to use a commercial real estate broker to renegotiate your current lease with your landlord. By extending your lease a couple years, a broker may be able to lower the rate you pay now. This is especially important for tenants who signed 10 year deals years ago and are now paying double what similar tenants are paying. O’Donnell Commercial has helped a number of tenants renegotiate their lease, and best of all, we communicate with your landlord so you don’t have to!
2. Downsize your space. Going hand in hand with our first point, landlords can’t afford to lose any tenants and will most likely do whatever it takes to keep your business in their real estate portfolio. Whether your company has downsized their workforce and thus needs less space, or possibly you can combine offices to save square footage, it is worth it to relocate your office to a smaller suite. Many times landlords will have a variety of spaces within a building or within their portfolio available, and therefore can meet your needs at a different location. Again, using a commercial real estate broker will help you work through this process and save you money in the end.
3. Review your operating expenses. The “CAM” charge, or Common Area Expenses, tacked on to rent is the operating expenses shared by all the tenants of the building to maintain the common areas of the building. Whether that be the exterior landscaping, cleaning of the common bathrooms or hallways, or snowplowing, the CAM is made up of a variety of items. It is a good idea to ask for this break down from your landlord on an annual basis. We are not implying that landlords tack on extra charges, but think it is good to familiarize yourself with what you are paying for.