2020 was brutal for the commercial office real estate industry as COVID-19 rendered office space “unusable” (in whole or part) for most of the year. And while some workers and execs will take more time away from the office in 2021, others are now shopping for new office space. For those lucky few, the market has never been more “tenant-friendly” given the growing chasm between supply and demand. So press hard for your best deal, including a few terms landlords historically would laugh at but now must consider filling their vacant suites and sublets:
1: Term-Length Flexibility
Generally, this means limiting your initial committed term while keeping options open for extending. For example, a 2-year initial term with three 1-extensions instead of a 5-year deal. Also consider the office you need in 2021 will be different than needed in 2022 or 2023—so you may what an initial term of 6 to 18 months with rolling extensions until your office space needs stabilize.
2: Office Size Scalability
Today, most businesses need 30%-50% of the square footage they had in 2019. But as COVID restrictions ease and the work-from-office culture resumes, that will change. Plus, there’s post-pandemic growth to consider and/or the possibility of future downsizing. Explore what office providers can do to help you scale up, down or out of office space as your business demands over term. Generally, if the landlord or provider has a lot of space in the building or area you want to be in, there will be options for scaling to bake in your lease.
3: Price Protection
With office size needs down 50%-70%, there’s a flood of office space supply returning to the market over the next 2 to 3 years (at least). Combine that with weak demand, rates have nowhere to go but down for the foreseeable future. So when negotiating price, check industry data projections on where rates are headed over your committed lease term to help you negotiate average your lease rates accordingly.
If your office search includes Bellevue/Seattle WA, be sure to include extraSlice as we’re delighted to include these “must haves” as part of our Best Business Case Office Space® deliverable. Call for a quote and schedule a tour.
Scott Warner
VP Growth
extraSlice – Best Business Case Office Space®
3600 136th Pl SE, Bellevue, WA 98006
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