Kraig M. Heeter, SIOR
Senior Vice President, Partner
Generally, every three to five years, every tenant is faced with very important decisions when their lease is scheduled to expire; should you relocate or should you renew? What are the financial implications? How do we ensure that we will get a fair deal in either scenario? When should we start the process to ensure that we maintain leverage and complete the entire transaction in time to avoid penalties? How do I coordinate the move in process? We can answer all of these questions for you and manage the entire process.
By working the professionals at Kidder Mathews, your company can look forward to some or all of the following benefits:
- Complete market coverage of alternative facilities
- Financial analysis of alternatives
- Management of the transaction timing to enhance leverage, avoid penalties and coordinate the move-in
- Free rent as an incentive to move or to stay
- Management of the tenant improvement construction
- Lower rent
- Increased tenant improvement allowance for paint, carpet, etc.
- Renegotiation of operating expenses (i.e., cap on management fees)
- Negotiation of options to expand or contract
- Negotiation of future renewal options at a fixed rate or indexed
- Negotiation of future termination options
- Use of a third party creates an arm's length relationship between tenant and landlord, thereby protecting your landlord/tenant relationship
- Our involvement allows you the chance to re-examine your space and maximize its utility
- Our expertise creates accountability and validates that you're getting the best deal possible
- We save you time to pursue and enhance the profits of your company
We Create Negotiating Power
We know every space that may suit your needs.
We inventory all available spaces and upon completing a needs analysis of your specific requirements we are able to determine every property that meets your needs. You need only call one broker to accomplish the task of determining suitable spaces. It is those alternative properties, when utilized effectively, that create the negotiation power you need to achieve the best negotiation results.
We let you know what other landlords will do for you to secure your tenancy.
By touring, selecting top candidates, submitting uniform request for proposals, and analyzing the results in a financial spreadsheet, we will clearly demonstrate what is the best deal available in the market for your company. This knowledge gives us the power to negotiate with your landlord and other prospective landlords.
If you intend to renew, creating the perception that you may leave has a tremendous impact on your negotiating strength.
Only by letting your landlord know that you have hired a tenant representative who will show you the entire market can you convince a landlord that you may relocate. Without a tenant representative, they will not take the threat of you relocating seriously. Even if you do not intend to relocate; it is the perception that is needed to gain negotiating leverage.
If you intend to renew, once we have identified three or four potential landlords and received proposals from them, we will let your landlord know who they are competing against.
This further increases your negotiating power by validating that your current landlord must meet market rates.
Timing is critical.
Regardless of whether you intend to renew or relocate, you must carefully coordinate the timing of your relocation or renewal. We will consult with you on when the best time the entire process. Without enough time landlords will know that you may not be able to complete a move. As soon as you lose this advantage, you lose all of your negotiating power. On the other hand, initiating the process with too much time in advance will lead to many landlords uninterested. When to start depends on your specific requirements and the status of the market. We will ensure that you maintain maximum leverage throughout the entire process.
Your Landlord's True Risk of You Moving
There are other factors and costs the landlord has to consider when securing a new tenant are as follows:
- Potential buyout of new tenant's existing lease
- Potential credit risk of new tenant
- Property may not cash flow while space is vacant
- Potential refinancing difficulties
- Potential less favorable lease language terms
The costs can be tremendous when compared to a typical renewal without a tenant advocate.
In terms of total costs, the landlord stands to lose an average 10+ months of base rent, plus operating expenses if they lose you as a tenant when compared to renewing you at favorable market terms. Additionally, there is a risk that amount will be significantly higher if a replacement tenant is not secured relatively soon.
We know the Landlord's true exposure. Let us help you leverage your value as a tenant.
Common Questions and Concerns About Tenant Renewal Services
Will you really save me money?
Depending on market conditions our services may save you 10% to 20% over the term of an unrepresented renewal (sometimes much more). You will definitely be ensured that you have obtained the best possible lease deal available.
I don't want to pay out-of-pocket for your services.
Our fees are fully paid by the landlord. There is no cost to you.
Won't using your services create "ill will" with my landlord?
No - just the opposite is true. Our services ensure a continuing cordial relationship with your landlord. Landlords respect tenants who approach their renewal on a professional third party basis.
I think I'm a good negotiator and can do this myself.
As we do this for a living, we have access to resources that are unavailable to you. The vast majority of Fortune 500 companies use local brokerage services for their renewals - this is because they recognize the tremendous value and accountability. Without a tenant advocate, a landlord will never take seriously the threat that you may relocate, and will not give you their best economic terms.
Can't I get market information for free in the mail, on the web, etc.?
You can only see a small portion of market information; we can provide full details of all pertinent properties and then match them with your particular needs. In doing so, we will enhance your market leverage and save you tremendous time.
My landlord says these costs will be built into my renewal.
In most circumstances, landlords budget for the payment of fees to the tenant's broker, since this practice has become common place. Additionally, by showing the landlord the alternative spaces available to you, as well as the costs associated with your space becoming vacant, the landlord will gladly pay our fee - at no cost to you.
I have already started discussing renewal and/or have received a renewal proposal from my landlord.
We will tell your landlord that you have decided to be represented by a tenant advocate and will be making a thorough review of the market. We will get back to him/her after we have considered the market alternatives and will then submit a renewal proposal along with proposals to competitive spaces.