The greatest smart ass in history (Oscar Wilde) once said “Most people are other people. Their thoughts are someone else’s opinions, their lives a mimicry, their passions a quotation”.
He was talking about the NYT when he said it.
In a recent NYT article, it was proclaimed that it is still a renters world – particularly in the world of commercial real estate.
Then again, it has always been thus. The key for a renter in the commercial world is to go where no one else is willing, providing that the area is safe for employees.
This has historically been New Jersey, both for the price of rent and for the avoidance of tax rates. But I digress. I do not want to get too far away from my ridicule of the NYT, and it is time that I get to it.
The root of my issues with the NYT is always their statement of the obvious, and in this case the source of my ire is no different. Apparently, the fact that renters can negotiate deals in triple net leases for rental allowances is news.
Seemingly more remarkable to the writers at NYT is the fluctuation that occurs in what can and cannot be negotiated, or the limits that are acceptable to the lessor and the lessee.
While the pure and simple truth is rarely pure and never simple, there are exceptions. In the case of commercial real estate in New York City, the supply and demand of the market dictate the limits of a negotiation.
While you could get $70 per square foot rental credit for TI’s in an extremely weak market, you may only be able to get $55 in a mediocre market. In a market with strong demand and little inventory, you might get nothing and be happy for it.
It is when you paid a premium and are on the hook for a long term lease that things may in fact be bleak. However, the answer to this is the simply the threat of filing a Chapter 13 reorganization that will get a lessor to take notice.
It is legitimate if the rent is making you insolvent and it may be all that is needed to get a landlord to come around to your way of thinking. It is simply pure negotiation tactics.
There is nothing new under the sun when it comes to negotiating commercial rents. And there is no tactic that should ever be off of the table unless it is illegal. Notice I did not say unethical.
That is for the world of the academian who has no practical experience in the real world. You see, some things can be pure and simple, like markets. Your only limitation is your imagination.
The NYT is incredible at observing the aphoristic and then distorting. Then again, if you like the NYT, just remember what Mr. Wilde would say “The secret of life is to enjoy the pleasure of being terribly, terribly deceived”.
If you believe the NYT, you must be very content indeed.
Appraisal Source is a New York based residential real estate appraisal firm. Their highly-qualified appraisal staff of New York City and Long Island real estate appraisers provide independent residential real estate appraisals for a variety of purposes.
Here’s the original article…It’s Still a Renter’s Market, Office Landlords Learn