W. Stevens Schmid has 25 years in the commercial real estate industry and currently serves as senior vice president of CresaPartners LLC, a division of St. Louis-based Pace Properties. Schmid’s primary responsibilities include providing tenant representation, consultation for business owners and organizations, and market expertise and transaction analysis for clients. Prior to joining CresaPartners, Schmid worked exclusively representing office users in the sale and lease of office buildings.
Q. What are some of the opportunities facing the commercial real estate market?
In the office market, there’s a lot of opportunities for companies that, with good credit [and] depending on when their leases expire, can post the landlord about early renewal and recast opportunities, which could create some immediate savings potentially. It can allow them to have the landlord accelerate reinvesting monies into the space to improve the tenant’s operating environments as well as, in exchange for a lease extension, they might have the opportunities to give back some space.
Q. How much time can you have left on your lease when you’re trying to renegotiate?
I think a lot of it has to do with how long of a term you’re prepared to commit to. It’s harder to do it when you have in excess of two years. Then, of course, on the backside, if you’re willing to (renegotiate) they’re probably going to be looking for a five-plus-year extension. That’s one of the challenges companies face is trying to forecast what their needs are.
Q. What are some ways to renegotiate your lease?
Obviously, the market creates leverage. The more the market softens, the greater the opportunity. If you’re a company with really good credit, I think you’re at a big advantage to use that to your advantage. The things we try to play upon is once you understand how much term they have and the market trends and the risk that would be associated should you move, we try to use those to benefit the tenant and educate the landlord that there’s greater risk not addressing an early renewal based on the unknowns of the future.