Tenant History
The tenant, a 100-year old international company, had an existing lease and wanted to renew. The building was a good fit for its business and included outdoor storage areas that the company needed for service vehicles and equipment. The tenant contacted its landlord nine months prior to the lease expiration date about extending the term, and the landlord said a proposal to extend would be sent. However, the landlord delayed in sending the extension proposal for several months. ITRA Global l Minneapolis-St. Paul was in contact with the tenant and provided the tenant with several warnings about the possibility of losing the space given the landlord’s delays in sending a proposal to renew. Instead, four months later, the landlord sent notice that they would not renew the lease because the adjacent tenant needed the space. Only five months remained before the lease expired, and the tenant needed new space in a very tight industrial market!
ITRA Global Engaged for New Space Search
Once the tenant was notified they had lost their space, we were engaged by the tenant to find a new location with a very short time fuse. The industrial market for space with outdoor storage was approximately 2% vacant, so there was grave concern that a new location in the company’s preferred target area would not be available. The tenant feared losing staff if a replacement location was too far away from the current location.
Alternative Spaces and Lease Negotiations
We quickly identified the best property options with the proper zoning, and that allowed outdoor storage of equipment. We toured spaces and requested proposals. Despite the extremely tight market conditions and limited time, we were able to negotiate dedicated outdoor storage areas for our client in a multi-tenant building and reduce the rental rates from the quoted face rates. Our client was able to relocate to a comparable building in its target geographic area with no loss of staff just prior to the expiration date of the existing lease. The tenant was very pleased with the results.
Lessons Learned
Landlords look out for their own interests. Tenants can protect themselves by working with an experienced, conflict-free real estate advisor on both new lease transactions and existing lease renewals. We recognize when landlords have hidden agendas, and identify alternative space options for our clients. This creates a credible, objective competitive bidding environment, and enables tenants to secure the best facilities for their needs with the most favorable terms achievable.
Article submitted by Wayne Teig / ITRA Global Minneapolis-St. Paul, Minnesota USA
