With strong office markets in many parts of the country, landlords are becoming rather bullish. In that spirit, they are looking to maximize leasing flexibility in accommodating new and growing tenants. One leasing flexibility tool that landlords have in their toolbox is the right in the lease to relocate a tenant. While tenants want to see their landlords succeed in keeping the building well occupied, they are more concerned with maintaining a productive office. Relocation is extremely disruptive for businesses when they are planning to move at the expiration of their lease; it’s even worse when the landlord issues you a notice out of the clear blue that they are going to relocate you. Even though the relocation move is typically paid for by the landlord, assuming the tenant has negotiated that into its lease, that is little consolation for the intangible loss in productivity to the tenant’s business. Outlined below are strategies to fundamentally eliminate this right and, where that is not feasible, to neuter it as much as possible.
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Office Tenant Letters of Intent Strategies
The best time for a tenant to negotiate key lease terms is before the tenant negotiates the lease. After a tenant requests the landlord to prepare a draft lease (on its landlord favorable form), the tenant has signaled to the landlord that it has committed to the building and consequently loses market leverage. As office leases and the entire leasing process is decidedly tilted toward landlords, to level the playing field, tenants should negotiate a detailed Letter of Intent (“LOI”) memorializing all business terms and key legal terms to serve as the “blue print” for the lease draft. A well negotiated LOI will maximize lease concessions for the tenant as well as save time and money in the lease drafting process. Additionally, the inherent process of negotiating an LOI, will tell you a lot about the landlord and their “hot button” issues, etc… Discussed below are strategies that tenants should employ to effectively negotiate an LOI.
What Tenants Need to Know About Estoppel Certificates
Willis Tower sells for $1.3 Billion. Such eye-popping sales headlines are fairly common today. With low interest rates and rising rental rates, we’re seeing record volume of office building sales in Chicago and many markets nationally. As part of the sale of an office building as well as refinancing, tenants will receive a document known as an “Estoppel Certificate” from their landlord as is commonly required in most office leases. Below is a brief explanation of “Estoppel Certificates” and what tenants should consider when negotiating their lease and what to look for when reviewing one.
Tenant’s Guide to Navigating Landlord-Favorable Office Markets
With the start of the new year and with the stock market continuing to break new levels, there’s a strong sense of optimism in our economy. As office vacancy mirrors employment rates, we are seeing vacancy rates continue to fall and rents rise nationally. Like the stock market, the office leasing market has its ups and downs. Maybe as an office tenant you were fortunate to lock-in low rents for a long term. But as companies grow, the demand for office space continues. Having 20+ years representing tenants during the office leasing cycles, here are some ideas on how to best navigate today’s increasingly landlord favorable markets.
Transparency Coming to Office Buildings’ Internet Connectivity
Reliable high-speed internet access is mission critical to businesses today. With rapidly changing technological improvements from video conferences to 3-D printing, a building’s connectivity must be vetted by tenants early in the site selection process as a key infrastructure element with the same level of due diligence as are utilities and HVAC. Unfortunately, there has been a lack of transparency as to buildings’ internet connectivity which can vary greatly. Moving to a building with inaccurate information about a building’s internet connectivity can lead to unforeseen costs and delays, not to mention loss of business. That, however, is changing in New York and soon in Chicago as well as other cities across the country.
The WELL Building Standard® for Your Well Being
How does your office space affect your health? If you think about it, most office spaces and buildings are designed to minimize the physical activity of its occupants. While many office spaces today are certified as meeting the sustainability standards of LEED, that does not necessarily equate to an office environment positively affecting its occupants’ health. Since its introduction, we are seeing many of the LEED sustainability standards incorporated into building codes and construction practices. These standards fulfill two primary objectives – preserving the environment and saving money. While it is assumed that they benefit the occupants’ health, that’s not necessarily the case. To help combat the national obesity epidemic and rise in the diagnosis of chronic diseases, new building standards are being introduced to focus on how the physical environment supports the occupants’ well being. Outlined below is an overview of The WELL Building Standard® (originated by the Delos Group, a New York developer) and what it means to office space occupiers. In my next post, I will address a broader healthy building standard from New York City. This standard, known as the Active Design Guidelines, was developed in a public-private partnership in 2010, which was supported by Mayor Bloomberg, and led to the 2013 launch of the non-profit Center for Active Design.
Loft Tenant’s Leasing Checklist
Many creative and technology companies gravitate to loft office buildings due to their unique character as they are typically renovated warehouse buildings (either concrete or timber construction). In addition to the usual office building due diligence, below is a checklist that tenants should use in evaluating loft office buildings. To thoroughly evaluate a loft office building, a tenant should consider the assistance of a knowledgeable tenant representative, project manager, architect, engineer and general contractor.
Creative Office Space Trends
Just exactly what is “creative office space”? What are today’s tenants looking for in office space? How are building owners accommodating this demand? Those questions were addressed a couple weeks ago at the Chicago Creative Office Summit. It was a roundtable discussion among architects, engineers, developers, a furniture vendor, a general contractor, building owners as well as office co-location companies. Here are the 10 key takeaways.
Tenants’ Top 10 Office Leasing Mistakes
As real estate is typically one of the top costs for companies, here is a list of the top 10 mistakes tenants make in leasing office space. The real estate decision, however, goes beyond cost. It also impacts the bottom line in terms of employee productivity as well as employee retention and recruitment which is becoming more and more important today. This is based upon the joint experience of me (being an attorney by background, with 20 years of representing office tenants locally and nationally) and nationally recognized commercial real estate attorney Ted Yi, Co-Managing Partner of Quarles & Brady, with over 25 years representing office tenants and landlords (locally and nationally).
Not Your Father’s Office – Office Space Trends
In the late 1960’s, Herman Miller, an American manufacturer of office furniture and equipment, spawned the idea of office cubicles. The cubicle’s popularity was sustained until about 10 years ago, when companies began to notice that the way in which people worked was changing; people were collaborating in small teams as well as relying on portable electronic devices that do not require that they be “tethered” to a fixed workspace.