You’re growing. You’ve got more employees, clients, and things to do. But as your company grows, so does your need for space. (Or does it?) And unless you’re in the commercial real estate industry every day, there are certain leasing secrets you won’t know. 

But don’t worry, we’ve got you. As Tenant Reps, we deal with landlords day in and day out. We know all the leasing secrets they don’t want you to know that will help optimize your CRE portfolio, improve your efficiency, and potentially save your company millions in real estate costs. And we’re here to share them with you. 

So, whether you’re looking to save some money, streamline your corporate spaces, or set your CRE portfolio up for the long haul, these leasing tips from the experts are sure to help. 

Now let’s get started. 

1. Consider how much space you actually need

2. Pay attention to your terms

3. Renegotiate your existing leases

4. Weigh the best locations for you to expand

1. Consider How Much Space You Actually Need 

To get the most out of your corporate lease, you should assess your optimal space utilization (and how this may change in years to come) for each of your properties. 
 

How much space do you need now- and how much will you need in the future? If you’re growing exponentially, you must account for future head-counts (which can be nearly impossible to predict.) 

=This is especially true now since the future of the commercial office is a bit uncertain. With the ubiquity of hybrid or remote schedules, it’s more likely than not that not all your employees will be in the office at the same time (if they’re there at all). 

So, even if you’re growing- that might not mean you need more space. Instead, what may work more efficiently is getting smarter about the utilization of your current leases. 
 

Take for instance, LinkedIn. The major tech company has ditched traditional office models and cut the number of desks in half. With the revitalized floor space, they are experimenting with 75 different seating types that allow for workplace flexibility. So, there is room for everything from open collaboration to more individualized workspaces. They breathed new life into their space without expanding.  

Contemporary setups are the way of the future, and as more companies provide them- good luck recruiting and maintaining great talent if you don’t. Holding on to traditional space utilization models (and devoting only 100-150 square feet per employee) will leave you behind. 

 Don’t use your headcount (or even your projected headcount) as the only basis of how much space you’ll need. This is especially true if you’re open to hybrid options (which, if you aren’t- why not??) 

According to Fortune,

Also, keep in mind- one of the most important things to know as a growing company is that: 

Larger footprints = More potential for wasted space.

As your portfolio grows, it’s easier to lose track of your optimal space utilization for each property. Underutilized space is expensive, especially when it adds up from 5, 10, 15+ properties. Reassessing your space utilization every year or so should allow you to keep an eye on your portfolio (and where you can improve it). 

 
2. Pay Attention to Your Terms 

The clauses within your leases can greatly impact your ability to use the space, how much rent you’ll pay, and what costs you can expect. As such, be sure to understand the terms before you sign. Because if you’re not careful, the language of your clauses could affect your ability to use them.  

If you’re taking on more space than you need right now due to growth projections or even considering space utilization, the clause you’ll want to pay the most attention to is your right to sublease. 

Every lease has a sublease clause. But did you know that nearly 95% of the time, they’re written to be inaccessible for the tenant? That is why a skillfully drafted sublease clause could save millions. 

If you’re planning for future growth, you can potentially take on more space than you need initially. With the extra room, you can sublease to new tenants. Thus, you’ll be earning back your CRE $ on space you’re not ready for now but will need in a year or so.  

The sublease clause isn’t the only term you should pay attention to. Other dangerous clauses include:  

• The Usage Clause  
• The Tenant Improvement Allowance
• Rent Escalations  
• Expense Stops 

3. Renegotiate Your Existing Leases 

If you’re growing but your real estate isn’t keeping up, it’s easy to feel trapped within a lease. The good news? Since corporate tenancy is such a hot commodity, you never have to feel confined within a particular space or rate. 

If you’re looking to expand, you’re in the perfect position to renegotiate. Landlords want to fill as much space as possible. So, if that means you’ll occupy more of their vacant space, they’ll likely be willing to work with you.  

 Renegotiating opens the floodgates to savings. For example, let’s say you need more space (but you’re not willing to relocate right now). If your landlord has additional space you want to expand into, you can renegotiate the terms and base rent of your original agreement. 

Or let’s say your growth in the area is sustained beyond your original projections. If you want to maintain a presence in the area, you can renegotiate better terms (and a lower base rent) if you’re renewing. You can also renegotiate the rate and frequency of your rent escalations. 

All said and done, if you’re looking to expand, you’re in a great position to slash costs by renegotiating. 
 

4. Weigh the Best Locations for You to Expand 

If you’re looking to get the most bang for your buck with your corporate leases, geographical considerations can’t be ignored. Fortune 500 companies are saving millions by moving to business-friendly states like Florida and Texas. They levy more favorable tax rates and regulations to boost your EBITDA. We talk about this a lot, so if you’re looking for more information to get started check out some of these articles: 

Relocate to Business-Friendly States During the Recession

Pros/Cons Relocating Your Business to Florida

Pros/Cons Relocating Your Business to Texas

Now is the time to face those complex decisions about your corporate locations. Could you be closer to your ideal consumer base or industry? For example, Raytheon, one of the country’s foremost aerospace manufacturers, disrupted a century-old occupation of Massachusetts property. Instead, they found that a Washington DC location would provide more convenient proximity to their field and encourage growth in novel ways. 

Most municipalities are willing to offer the right company potentially millions in property tax breaks, tax credits, and job training credits to encourage financial growth in their community. Why not? They know by you bringing jobs to their towns, you are increasing their tax base and improving their local economy.  

The trade that the municipalities will look for in exchange for these Economic Benefits is the number of jobs you are bringing, the type of jobs, the average annual salary, and your expected Cap Ex. Additionally, what construction jobs and Cap Exp are being spent by a potential landlord (or your company) in creating the space you need.   

To be sure, to achieve the maximum amount of Economic Benefits, you will need a consultant. iOptimize Realty® is an Economic Development consultant and can help you with this.  If you don’t use us, then you should pair yourself with an experienced Eco Dev consultant.   

The agreement will depend on your unique arrangements (and what they’re willing to offer), however, these packages can be incredibly generous. For instance, Amazon was offered $125 million to build a warehouse in Niagara, New York. Communities across the country clamor for their business. As a result, the industry behemoth is in talks to receive the nine-figure tax break, one of the largest subsidies it ever was offered. 

When receiving offers from local governments, you can leverage your tenancy to create competition and receive the maximum package. This is not something to be ignored (and is a key leasing secret that savvy CRE professionals never forget). 

Work With a True Tenant Rep 

As you can imagine, there are innumerable ways you can get taken advantage of if you’re not familiar with commercial leasing nuances.

And when you’re dealing with a growing company, you don’t have time (or energy) to painstakingly scour over 80-page leases to ensure every term is in your favor. Enter- Tenant Reps. At iOptimize Realty®, we are Tenant Reps with over three decades of experience. Consider us your special forces CRE team. When you need us, we’re here to help optimize your space utilization, renegotiate with your landlord, relocate, and beyond. 

So, if you’re ready to unlock more leasing secrets to benefit your growing company, talk to an expert today. 

To read more about Tenant Reps, learn how we can act as Your Ad Hoc CRE Department.