Practice Management

Okay!  Okay!  I will admit it.  I am not a big fan of commercial office space.  I work at home and I run a virtual office.  Therefore, commercial office space is not necessary for me.

If this is not the boat in which you find yourself, or just feel or just need to have a more traditional office environment for your practice or your law firm, now might very well be the time to start negotiating for office space or to start trying to renegotiate the lease on the space you have.

After all, office space and rent is all about money.  When times are good for commercial landlords they border on the arrogant.  Lease terms are long, CAM charges are aggressive, rents are high, tenant finish allowances are low, and landlords are typically unaccommodating.

But, you know what?  The World is round my friends, and what goes around, comes around.  It can be payback time for such arrogance, and I encourage you to take royal advantage of this situation.

As reported in the New York Times, among other papers, vacancy rates in office buildings exceed 10% in virtually every major city in the country and they are rising rapidly.  The Urban Land Institute predicts 2009 will be the worst year for the commercial real estate market since 1991-1992.  Building owners will need to refinance these buildings, and to get the loans they will need tenants.  Analysts predict that commercial real estate is the next ticking time bomb.  Experts believe that vacancy rates will climb another 5% this year alone.

To those that need space, now will be the time to start negotiating and negotiating hard.  Do not be afraid to walk away from an offer completely if it is not outrageously in your favor.  If you are in a lease, do not be afraid to demand the lease be renegotiated or that you be allowed out of the lease.  You can play on the fear that the building will have even more space come available if you do not get relief.  Do not let building tell you they are not affected by this downturn.  If they are not, they know they will be affected in the near future as tenants will have more options and offers.

It is not all about lease rate either.  Sure you need to to aggressively negotiate this downward.  But, you need to concern yourself with the term of the lease, tenant finishes, and primarily rent escalations during the term of the lease and CAM charges.

Go out there and do me proud.