Doron F. Eghbali Commercial Leasing Law Blog on Lawyers.com

Vacancy High and Rents Down in Commercial Real Estate Market

Monday, February 15, 2010 by Doron F. Eghbali

Small businesses who have survived the "Great Recession" should take advantage of the down commercial real estate market and obtain relatively better deals.

VACANCY HIGH and RENTS DOWN

In fact, commercial rents were down 36% in October from a year earlier and 44% below the 2007 peaks, according to Moody's Investor Service Inc. In addition, the national office market's vacancy is expected to rise as high as 19% by the end of 2010, the highest on record, since Grubb & Ellis Co. started to track the national market in 1986.

MORE SPACE LESS RENT

Most commercial landlords, understandably, are wary of losing tenants. They know finding tenants is expensive and difficult. In addition, the alternative of leaving their properties vacant is not a prudent option given the costs associated with such move. Hence, most landlords are willing to bring down rents and give more space or even cover utilities.

TENANTS' MARKET

This is, indeed, the tenants' market. Tenants have more leverage at negotiating table. If they cannot obtain the deal they are reasonably happy with, they could go to another landlord and negotiate in good faith. In fact, obtaining a relatively better office deal would leave prudent business owners with peace of mind for years to come.

ACTION

ASK FRIENDS AND FAMILIES: Ask your friends and families for better office deals.
NEGOTIATE WITH YOUR LANDLORD: Negotiate with your landlord and ask for rent relief. Point out the vacancies in your building or surrounding areas. Point out the fact many other landlords are providing rent relief to their tenants because they realize the severity of the situation.
GET TO WORK: Go out and take a walk in the area you would like to have an office.
USE SOCIAL NETWORKING SITES: Use social networking sites such as Linkedin to find prospective landlords.
USE LEGAL PROFESSIONALS: Take advantage of legal professionals to draw up a commercial lease that protects your interests.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. He Can be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

Posted at 10:29 AM

Topic: Commercial Leasing