Is the price of lease agreement renegotiation payable?

The CBRE has created the first from a series of reports called "with an expert's eye," which expresses the observations related to lease agreement renegotiation.

Lease agreements renegotiation are gaining a higher percentage in all market transactions. It is caused by changing market conditions and a transformation of the competition environment.

Lease agreement is a form of business assurance from both sides and does not predict any changes, which means that, rent has to be paid, even if the company has encountered with difficult financial situation. My advice in such situation would be; go to the building owner to renegotiate the lease agreement. It is worth remembering then, that income stability is much more important that frequent changes of tenants, which cause marketing expenses, agents’ provisions or vacant space maintenance, which neither produce any income. If the building owner is convinced that the problems are temporary, and our company has solid base and lucrative perspectives, significant savings can be renegotiated, states Daniel Bienias, Director of Tenant Representation in CBRE in Poland.

Thanks to this renegotiation one can gain additional financial benefits, for example, temporary exemptions from paying rent, or the budget for surface renewal. How efficiently talk to the owner? The easiest way to do it is to hire a professional, experienced advisor, who will get the best terms.

According to CBRE data the renegotiations are increasing. In 2012, on the Warsaw office market, lease agreement were signed for 608 500 sqm of space, of which 28 per cent (that is 170 000 sqm) came from renegotiations. Such form is especially attractive for companies, which are located in the central headquarters.

This is the first comment from the “with an expert’s eye” series. We believe that “With an expert’s eye,” the series of specialized comments of CBRE experts will interest as media, as our clients, offering deep analysis, fascinating case studies and incisive look on various nuances and traps on the commercial real estate market, as well as emphasizing the benefits, which can come from the knowledge of the market functioning, said Joanna Mroczek, director of consulting and CBRE market research in Poland

Tags: CBRE
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