3 Ways to Find Out if You're Over Market on Your Corporate Real Estate

While you might not be able to change your leases until they are due to roll over, having a good sense of which of your leases are reasonably priced and which are unfavorable can help you build a long term corporate real estate strategy. When you know which sites are overpriced, you can start preparing to either renegotiate them, move them or even shut them down. Depending on how much exposure you want to get in the market and how much information you want to collect, there are three ways that you can go about researching market rent levels for the leases in your corporate real estate portfolio.

Conduct an Internet-Based Rent Survey

Through Internet services like Loopnet and CoStar, as well as broker web sites, you can do a relatively good job of surveying the market and determining which spaces are available. These services will also frequently give you an indication of what the asking rents are for those spaces and may also include data on any common area maintenance charges that go with the base rent. By looking at the spaces that are comparable to yours and available in the market, you can get a good sense of what landlords expect to receive for spaces like yours.

The problem with making corporate real estate portfolio decisions based on a do-it-yourself survey is that you frequently get good data about asking rents, but are less likely to get great information about what landlords are actually accepting. When you can get that information, it's frequently only available through paid services that can cost many thousands of dollars. Unfortunately, without knowing where leases are actually getting signed, you won't know where the market actually sits and how your rent truly compares.

Shop as a Tenant

To get a sense of what landlords will actually do when a prospective tenant is in front of them, you could go out to market and begin shopping. This strategy can be very appropriate if you're nearing the end of your lease and in a position to start to have theoretical, if not actual, negotiations. Shopping can give you great information, but it has two drawbacks. Looking for space can be very time consuming. It can also weaken your position with your existing landlord if he is looking to move you out anyways.

Retain a Professional Broker

The easiest way to survey the market is also the best method. Instead of wasting your corporate real estate department's time, hire a market professional to research and report back to you. A tenant representative broker that is already active in the area of interest doesn't just know what landlords are asking. He knows what they're actually taking. He should also have his own subscriptions to third-party data sources, saving you from the expense of signing up for them.

Using third-party research doesn't just give your corporate real estate team the information that it needs to make decisions about rents in its existing spaces: If the researcher can also populate your portfolio management software with their data, you have information that you can also use for measuring your sites' productivity and their expense levels relative to the market as a whole. By putting it into your software, it's integrated with all of your other property and lease information, giving you a single place to review both your corporate real estate portfolio and the surrounding markets. This helps you to make better decisions, more quickly.