T.I.: Not just the King of the South – Gregg Cohen
T.I.: Not just the King of the South
While T.I. rapped “About the Money” landlords think about T.I. and how those dollars add up.
T.I. in the landlords’ world is Tenant Improvements and in this case, we are talking about lease renewals. Let’s go with a reasonably typical situation, your company has been in a great space the last 10 years. Everything you could ask for: no headaches, decent landlord (after all you’ve paid your rent on time so they should love you), reasonably priced, great location for all those who commute from all over and everybody knows where the good coffee spot is and where to get a good bite to eat.
Now your lease is expiring, and your landlord comes to you to see if you want a renewal. Well, it’s all going well so you should just accept, right?? Wrong
You see, that space might be absolutely perfect for you and you may not want to leave at all. But what you may not know is that by signing that lease renewal you’re actually saving your landlord. BIG TIME.
“How does that work?” Alright, let me explain:
- New buildout = Money out the door
10-year-old space may work for you but probably won’t work for a new tenant. So in order to accommodate them a landlord will have to demolish and rebuild a space which could be upwards of $100-$125 per square foot plus the downtime associated with demolition and construction. You may not get all $100 per sf you are saving the landlord by keeping the space as it is but you deserve something
2. A vacant space. = Zero cash flow
If you move out it will take the landlord anywhere from 3–12 months to find another tenant. That’s rent they are not collecting. Plus you are a known entity to them and you’ve paid your bills on time. They have no idea what they are getting with someone new. What’s the phrase, a bird in the hand?
CONCLUSION: YOU HAVE THE LEVERAGE IN THIS SITUATION.
Plain and simple, you’re helping out your landlord with all these savings and should get something for it. lower base rent, more free rent, a lower security deposit, and renovations. Take advantage of the opportunity.
Check out more on this and other musings @ www.greggcohen.nyc