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Tips For Tenants in 2012

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With the arrival of 2012, we look forward to continuing signs of improvement in the commercial real estate market. From a tenant’s perspective, the good news is that there are well priced opportunities out there, but finding the perfect location takes time and careful consideration. When working with clients, I recommend keeping the following tips in mind for 2012.

Lock In Deals Today
Now is the time to lock in advantageous deals. Signing a three-to-five year lease today will shield tenants from future rate hikes as current capacity is absorbed and the market continues to strengthen. Attractive deals are available with room for negotiation, so tenants with stable businesses have much to gain by securing space now. A gross lease including operating expenses is an excellent hedge against future increases in operating expenses.

Opt for Improvement
Before settling on a space or a property, determine what types of improvements are needed and whose responsibility those expenses will be. We are still in a “tenant’s market” where it is not uncommon for a landlord to make improvements and still negotiate extra benefits, such as free rent for a predetermined time period. If you are the tenant, remember that it’s not financially beneficial to improve someone else’s property.

Keep an Open Mind
While the commercial real estate market may not be seeing as much activity as it did at its height, it’s important to recognize that demand still exists and landlords will not give in to unreasonable requests. It’s wise to do your market research and learn the going rental rates for similar properties in your geographical area. Find out what types of incentives other landlords are offering. Even in a somewhat soft market environment, overly high expectations are unrealistic. When making a deal, it’s always important to leave room for negotiation and compromise.

By Greg Milopoulos
Broker Associate
Berger Commercial Realty Corp.

Berger Commercial Realty Corp. Broker Associate Greg Milopoulos’ primary focus is  leasing and sales of office, medical and industrial property. Milopoulos, who has been with Berger Commercial Realty Corp. for two years, has a strong background in management skills, construction project management and sales.

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