3 Questions Featured

8:00pm EDT September 25, 2009

Ray Sandelli began his brokerage career as an office leasing specialist for CB Richard Ellis in Seattle and has moved up through the company, now serving as senior managing director of the Tampa office. In 2000, Sandelli received the J. Frank Mahoney Award for Excellence, the firm’s highest management acknowledgement.

Q. Is now a better time to buy or lease?

Leasing versus buying is more part of an overall business decision than simply a real estate issue. Leasing certainly affords less capital outlay and a greater degree of flexibility in either downsizing or expanding. This is a very attractive option for many in times of uncertainty. Prices for commercial properties have declined to a point where (purchasing) may now be a viable alternative. In addition, ownership allows a greater degree of direct control over future occupancy costs.

Q. How can you renegotiate your lease before it is up?

The term ‘blend and extend’ has become very popular in the past months as tenants have sought to lower their near-term lease obligations as one effort to help maintain their bottom-line profitability. In return, they are agreeable to extending their term for a longer period. With fewer active tenants in the market, landlords have become very focused on tenant retention. Those efforts have allowed not only a more receptive atmosphere to such renegotiations but at favorable terms. I would also add that it is prudent to approach such discussions in a prepared manner. A clear dialogue that helps the landlord better understand a tenant’s current business situation and future strategy will help to not only solve near-term challenges but also help both plan for longer-term needs.

Q. What should a business look for in analyzing a new lease?

One of the unique aspects of today’s market, beyond the typical terms of a lease, is the focus on the financial strength of the landlord. It has become (increasingly) important to know not only who your landlord is but their capacity to deliver on the terms and conditions as promised. The most important advice is to make an informed decision.