Over the last several months, we've been contacted by businesses across Midtown facing all-too similar dilemma's that have become common in 2020: approaching a lease expiration and unwilling/unable to commit to a move or long-term extension due to the uncertainty created by COVID-19. To top things off, their buildings were not budging on the asking rents or offering market-rate concessions.
While certain landlords continue to meet the market with substantially reduced rents and large concession packages, others are still playing hardball with hopes for a quick recovery. In fact, some buildings with newer owners may be unable to lower rents due to the financial obligations and cost-basis' associated with the new landlord's ownership of the property.
Outside of exploring significantly discounted alternatives nearby, we've guided our clients in these situations with a variety of different approaches:
negotiate additional free rent and an increased Tenant Allowance to not only offset the difference but lead to an even lower net-effective rate
reduce security deposits for credit-worth tenants to keep more cash on hand
pursue a short-term extension (6-12 months) in order to gain a clearer understanding of specific space needs
In addition to many other things, 2020 has been a year for the tenant, with firms in the market for office space facing a market ripe with opportunities. Now more than ever, it's important to explore all potential routes and to take advantage of those that fit your teams business needs.