Why Most Tenants Overpay

by Feb 11, 2019Tenant Tips

Why Most Tenants Overpay

Landlords know that the overwhelming majority of commercial tenants renew their leases.

There are common and understandable reasons for this. First, let’s face it, it’s a hassle to move. It disrupts business and it’s stressful for everyone involved, including employees. Besides that, evaluating options requires an investment of both time and money. And then there’s the additional expense of making a move. Without actually quantifying and verifying these potential woes, and choosing instead to remain in a current lease situation based on an assumption that they exist, a tenant is said to be suffering from “Captive Tenant Syndrome”. This is the mistaken belief that they are, in a way, stuck in the space they currently occupy. What if those issues could be minimized or mitigated entirely? Consider the possibility that improved efficiency of the new office may offset the required effort to move. What if the excitement of a new workplace improved morale and increased employee productivity? Perhaps the potential new landlord may be willing to incentivize the agreement. This might mean absorbing the cost of the move or paying to outsource coordination of logistics to make it happen.

When considering a move, it is important to understand the position of both the current landlord and a prospective landlord.

For instance, what would a move cost the existing landlord? And, how motivated is a potential landlord to gain a new tenant? Landlords know that a tenant will consider the negative impact a move may have on their business when facing a lease expiration. Many will count on it to achieve higher profits on renewal leases compared to attracting a new tenant and negotiating at a slightly higher rate. For an existing landlord, there can be significant losses when a tenant vacates. Depending on the type of space and its location, a landlord faces months or years in lost rent while carrying the property tax, insurance, and other expenses. Once a new tenant agrees to move in, there are usually additional costs to get the deal done like improvements, and discounted or deferred rent payment. Both the tenant and landlord have significant considerations when it comes time to negotiate a lease-end extension or renewal. This should be a collaborative effort that acknowledges any challenges and benefits for both parties.

So how does a tenant avoid leaving money on the table when a commercial lease expiration is approaching?

  • Be honest with the current landlord and any prospective landlord.
  • Conduct a serious evaluation of relocation options to get the best terms:
  • Search spaces
  • Tour
  • Meet with prospective landlords
  • Get construction estimates
  • Issue formal requests for proposals
  • Prepare a fully loaded financial analysis
  • Get feedback from employees and the people who will be affected by the decision.
  • Get to know the motivations of the landlords in question.
  • Learn the history of any new space being considered.

In other words, go in with eyes wide open and know where you stand. Putting in the effort to evaluate a situation is the only way to determine the true cost of relocation versus renewal. Weighing the pros and cons creates an opportunity to negotiate a lease that makes sense for both sides.

 

Any questions? Contact Ryan at  rhartsell@oxfordcres.com or  (713) 840-8528.

Ryan J. Hartsell , SIOR, MRE, Principal, and Managing Partner of Oxford Partners LLC, focuses on reducing the cost and risk associated with leasing and purchasing office and industrial property. He is recognized by his clients for his attentiveness, market knowledge, and negotiation prowess. He holds a master’s degree in commercial real estate and a bachelor’s degree in finance. As a third generation Houstonian and Principal of Oxford Partners, he has a unique appreciation for the business owners’ challenges by way of his own personal experience, which translates into better representation and empathy for his clients. 

Ready to Secure
Your Space to Thrive?
Let's Talk!

2000 W Loop S, Suite 400
Houston, Texas 77027

Our Services

Renew
Renew
Relocate / Relocate Early
Relocate / Relocate Early
Expand
Expand
Downsize
Downsize
Sublease / Terminate
Sublease / Terminate
Purchase
Purchase
Sell
Sell
Healthcare Tenant & Buyer Agents
Healthcare Tenant & Buyer Agents
Portfolio Management
Portfolio Management
Data Analytics
Data Analytics
Economic Incentives
Economic Incentives

What our Clients Say

  • Working with Oxford Partners to find our companies new office space went really well. We had the pleasure of working with DJ who was professional, helpful, and responsive throughout the... read more

    Drew Roberts Avatar Drew Roberts
    July 23, 2023

    Highly recommended! We were in an urgent need of assistance in relocating our facility, and Chase was just beyond helpful throughout the whole process. Very professional, knowledgeable, and always beyond... read more

    Sean Choi Avatar Sean Choi
    August 23, 2022

    Vincent assisted my law firm in securing new office space and was always responsive, insightful and a great advocate for my business throughout the entire process. I cannot... read more

    Brian Nguyen Avatar Brian Nguyen
    August 23, 2022
  • You don't want Chase McAteer, you NEED Chase McAteer! I had the pleasure of working with Chase a little over 5 years ago when I started a new company and... read more

    Diana Dang Avatar Diana Dang
    August 16, 2023

    Vincent Vega has been so helpful throughout the process of obtaining a new office space. He was always available to answer all questions when needed. I definitely will recommend him.

    Faustine Avatar Faustine
    August 23, 2022

    Ryan and Melissa with Oxford Partners were amazing to work with and helped our company locate a new clinic space in a very short timeframe. The communication was excellent throughout... read more

    Principle Health Systems Avatar Principle Health Systems
    December 23, 2022
  • We have used Ryan and his team for years, for our commercial leasing needs. He's prompt, professional, and tenacious in ensuring your looking out for your best interests, throughout... read more

    Dave L Avatar Dave L
    August 2, 2023

    Chase McAteer worked diligently with our team on finding a suitable location for our business. Our needs are a bit unique, but Chase took the time to understand. ... read more

    David Singleton Avatar David Singleton
    August 23, 2022

    Oxford Partners handled the 2022 negotiation of Strategic Construction's corporate lease renewal flawlessly. Ryan Hartsell knew the market and had a great working relationship with the landlord reps, that he... read more

    Matt Beshara Avatar Matt Beshara
    August 23, 2022
  • Ryan and Oxford Partners have been a tremendous asset to our business. Their dedication to serving our needs is unparalleled.

    Victor Lee Avatar Victor Lee
    August 23, 2022

    Oxford Partners were great with their follow ups and helped us negotiate a better contract. Thank you Ryan and Perry for all your help.

    AliAsgher Sunelwala Avatar AliAsgher Sunelwala
    August 22, 2023

    I am thanking my lucky stars I got to work with DJ (Douglas) Hale on my recent lease renewal for my dental office. He was thorough in going... read more

    Jessica Caballero Avatar Jessica Caballero
    August 23, 2022
  • Oxford Partners, and specifically D.J. Hale, provided us with the best representation we could possibly ask for when searching for a property to purchase for our church. They will be... read more

    Matthew Hefti Avatar Matthew Hefti
    August 16, 2023

    Chase helped us find a suitable commercial/retail location in Mesa Arizona. It has taken several months. I have had a similar relationship with other real estate professionals in the past,... read more

    Randy Holmgren Avatar Randy Holmgren
    November 23, 2022

    Oxford Partners was a pleasure to work with. Very professional and courteous, D.J. acted in our company's best interests to find the best commercial office space, layout and price... read more

    Darren T Avatar Darren T
    August 16, 2023
  • Ryan Hartsell is great to work with!

    Patricia Smith Avatar Patricia Smith
    November 23, 2022

    Chase McAteer at Oxford Partners: I met Chase McAteer when I was looking for a leasing space for my therapy center in 2020 in Houston Texas, just at the start... read more

    Premala Naidoo Avatar Premala Naidoo
    August 23, 2022

    Absolutely awesome experience! Nick out in Raleigh is amazing to work with. He helped me find the perfect location in a market that did not seem to friendly for a... read more

    Robert Winters Avatar Robert Winters
    April 23, 2023
  • We highly recommend DJ Hale to help you with your acquisition or sale. DJ worked with us in finding and acquiring our first church home in the Heights area.... read more

    Mark Hartman Avatar Mark Hartman
    August 16, 2023

    We are from Canada and where looking to open in Houston. Chase and Ryan from Oxford helped find us the perfect location. We were able to fly in for a... read more

    Ryan Aldous Avatar Ryan Aldous
    May 23, 2023

    Ryan Hartsell with Oxford Partners was very helpful in finding my company a new office space recently. Ryan made the process very easy and smooth and was able to work... read more

    Houston LISC Avatar Houston LISC
    August 23, 2022
  • Matt Rodgers helped us find a great office in a great building and was nice to work with throughout the whole process.

    Morgan Hartmann Avatar Morgan Hartmann
    August 16, 2023

    Chase and Melissa were awesome! They kept us informed every step of the way and worked so diligently in helping us to secure a property. We look forward to working... read more

    Cayla Clark Avatar Cayla Clark
    January 23, 2023

    Chase has deep expertise in commercial leasing. He's patient, professional, and continued to grind on our behalf day-after-day in a tough market. We couldn't recommend him strongly enough.

    Corey Astill Avatar Corey Astill
    March 23, 2023
  • Ryan and Perry did an excellent job guiding our company in our search for a new office space to lease. They are very knowledgeable and were extremely patient throughout... read more

    Sarah Page Avatar Sarah Page
    August 23, 2022

    Professional, supportive and quick. I got a great help from DJ and really appreciate it.

    Jimin Lee Avatar Jimin Lee
    April 23, 2023

    I recently had the privilege of working with D.J. Hale on a couple of projects. I have to congratulate you folks on having such a wonderful person in your employ.... read more

    Kenneth Kleinmann Avatar Kenneth Kleinmann
    February 23, 2023
  • Perry and Matt were excellent to work with. They were patient and listened to our wants and needs when it came to finding a new office/warehouse for our quickly... read more

    You Know Avatar You Know
    November 23, 2022

    Great experience working with Ryan! Would recommend.

    Amit Mittal Avatar Amit Mittal
    August 23, 2022

    I recently had the pleasure of working with Perry Mazzone as my real estate agent, and I couldn't be happier with the experience. Perry was absolutely fantastic! He worked tirelessly... read more

    Tedjo Liman Avatar Tedjo Liman
    April 23, 2023