We have all read the articles about the impact of remote work and hybrid work on the office sector. The last few years have definitely had major effects on how businesses use their office space.
In my practice, I always encourage my clients to think forward, not backward, to disregard the configuration they have had for years and to think creatively about what the future office should be. It really doesn’t cost much more to make an office great. It is more about function than finishes, and paying attention to what is important in the way your organization is using its space today.
In many cases, tenants are right-sizing their space when their present lease expires. This is another expression for downsizing. They have had a number of post-pandemic years to settle into their current mode of operation and the routine of what employees are coming into the office, when they are coming in, and how they function when they get there. They may adopt a “hoteling” structure, where there are no personal offices, but people just put their laptops on whatever office or workstation is empty at the time.
In other cases, tenants are totally re-thinking their space. There have been both carrots and sticks offered to attract employees back to the office over the past few years. Generally, the carrots work better, and nothing is a better carrot than an office that encourages people to come to it, with a design and configuration that supports the type of work they do, spaces for collaboration, lots of natural light for everyone and amenities both inside and outside the physical office.
I start my planning process with each client 2 years prior to lease expiration. That gives them time to do think about the next step, gather the data and discuss with their team, and create a set of criteria for their next space or next building so that we all agree on the “shopping list” for the new space. Does their present building work? Is it still the right location, or have employees’ commuting patterns changed over time? That takes months to do, with many follow up calls from me along the way.
Then I begin to research the market and the opportunities that are available, both on and off market. Next, it is into the car to actually walk the buildings and the spaces.
When we get to a short list we give the owners our space criteria and ask for test fits, to get a first look at how the space might work for my client and its workflow. That generally gets reviewed and refined to 95% accuracy and the cost of construction gets
budgeted.
Only at this point can we begin economic negotiations. As it takes about a full year to strategize, select space, negotiate terms and conditions and a lease document and build the space, my client always has the option to stay or to go.
Those tenants who say “I can start six months before my lease expires” have zero options if the renewal negotiations do not go their way. You can always pause the process if you are early, but you can never make up time if you are late.
That’s the quick and dirty of the process. Even if a business is dead set on renewing its lease, it should take the time to do its homework. If you understand the market, the buildings and spaces available and the amenities, you can better evaluate if the price you are paying now is at, below, or above market. You have to take a zero-based approach to have a successful process. There are opportunities out there, but not as many as in the past. Lots of buildings are being demolished or repurposed into medical or other uses. Due to the high cost of construction, lease terms are typically 7 to10 years, so it is a significant financial investment. Give me a call so we can discuss how to do it right.
HOWARD PROPERTIES ANNOUNCES LEASE TRANSACTIONS
Howard E. Greenberg, President of Howard Properties, Ltd. Valhalla, New York announced that his firm has represented tenants in the following lease renewal transactions.
Project Morry has signed a long-term renewal of its 3,331 square foot space at One Gateway Plaza in Port Chester. Howard Properties had placed them there seven year ago in a relocation from Elmsford and again represented the tenant in its renewal negotiations.
Howard also represented Golden Physical Therapy and Y. Taubenfeld Physical Therapy in a 3,524 square foot long-term lease renewal at RPW Group’s 440 Mamaroneck Ave. in Harrison.