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Rent Office Space Now – Rates Are Great – Think Long Term

I deal with a lot of prospective tenants on a daily basis.  The one thing that still surprises me is that while those in the market to rent office space realize that there are some great deals with respect to rate, they still think in a “short term” mentality.  Certainly that mentality is driven by uncertainty in the economy – I get that.  I submit, however, that if you have a successful business, need to rent office space and are in the market – lock up the good deals of today for the  longer term.

Like any other market cycle, this too shall pass and when it does you can bet your last dollar that rates will increase.  As a business, would you rather lock up a rate that is $2.00 – $3.00 per square foot lower today than it was two years ago and know that by the end of a 3-5 year lease you will still be at least $2.00 per square foot lower than the current rate may be at that time or would you only want to commit to a 1-2 year lease and be back in the market looking for office space to rent when rates are already on the rise?  In my opinion the former is the better option.  I would sign a 3-5 year lease today at a great rate and know I am hedging against the higher cost of the future.  In today’s market you may even be able to negotiate a renewal option that all but guarantees that your future rate will also be a “below market rate” when the first lease term expires.

I see a lot of prospective tenants that are downsizing too.  These companies  have the best opportunity to get the “double wammie”.  They can save cost to their bottom line by getting a little smaller and taking advantage of the great rates today.  Huge savings.  I still caution, though, don’t get stuck in the “short term” mentality.  Think long term.

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