One of the most interesting aspects of our business as commercial real estate brokers is helping tenants who are facing the expiration of their lease term and their landlords who are facing a potential vacancy. 

From the tenant’s perspective, should they renew; should they relocate? 

Is their lease rate at current market rates? 

Is there a better location? 

Are they facing an expansion or contraction of their business?

For how long are they willing to commit to this current or future location?

As tenants face options in the marketplace, they need to consider a number of things including not only the actual cost to relocate their business – moving costs, new tenant improvements, rebranding, advertising, marketing - but they also need to consider the intangible costs of relocation – what customers will I lose or gain if I am too far away from my current location?

Will I lose business if I am not near a particular intersection, traffic generator or synergistic business anymore? 

Is my merchandising or inventory delivery system negatively impacted? 

Will I have to close during my move? 

Ideally, these questions and analyses need to be undertaken almost a year in advance of the expiration of the lease to give adequate time to not only analyze the impacts, but investigate relocation options and to discuss the situation with your current landlord and team-members.

Don’t ignore lease expirations.

Landlords need to be proactive with tenants to ensure their occupancy stays as high as possible. Talk with tenants to see how they are performing well in advance of lease expiration to ensure you aren’t notified that your tenant isn’t renewing when the moving truck shows up. Make sure that if a tenant tries to negotiate a rent modification or tenant-improvement in exchange for the lease renewal that you are weighing the actual cash investment versus the return over the renewal term as well as the intangible benefit the tenant brings to your property – does the business fit in with my other tenants? 

Do they bring other visitors to my property? 

What is my cost if the tenant leaves and I not only have lost income for a period of time while I’m finding another tenant, but I also incur new tenant improvement costs and legal/commission fees to pay for a new tenant? 

It is clear to see that regardless of whether you are a landlord or tenant, there are a number of things to weigh when leases come up for renewal. Perspectives can be VERY different depending on which side of the table you sit on and what your long-term goals are. Be sure you are seeking out knowledgeable, trusted professionals whether that is your CPA, attorney, leasing professional, property manager, or operational consultant to make sure you are up to date on current market conditions and creating a plan that meets your goals and is hopefully a win-win for everyone involved.

THE PLUG
Listing of the week - Boulder Creek

Join anchor Northbank Surgical Center in this gorgeous, centrally-located, medical office building. This 9,407 rentable square foot second-floor suite is the nicest medical office suite on the market. Excellent parking, signalized access and located within a mile of the Salem Hospital campus, this is a must-see for any qualified user. There is an opportunity to demise the suite into two units (4,478 RSF and 4,929 RSF) for smaller users.

Have questions? Click here to email Jennifer to learn more.

COMMUNITY SPOTLIGHT
The United Way’s “AWESOME 3000”

Since 1983 the Awesome 3000 has been a staple in the Salem-Keizer Community, bringing friends and family together in support of our Salem-Keizer School District; its students, staff, and teachers. The 2023 Awesome 3000 brought together nearly 2000 youth participants from our surrounding communities. With sponsorship proceeds, the United Way is able to invest directly into the Salem-Keizer Scchool District. The sponsors from last year’s event raised close to $40,000 for the Salem-Keizer School District!

WHEN: Saturday, April 27, 2024

WHERE: Willamette McCulloch Stadium at Bush Pasture Park

Have questions? Click here to learn how you can VOLUNTEER!