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admin | April 5, 2019
The Lease Renewal “Loyalty Premium”
John Jarvis | HM Blog
June 26, 2025
Commercial real estate is an inefficient marketplace. It is also a bit of a relic, unchanged in the last hundred years and largely dominated by landlords and their brokers, which has resulted in an industry where long-term, loyal, repeat customers are repeatedly expected to pay a premium. I call it a loyalty premium. The mechanism for this is the renewal option, which unsuspecting corporate tenants use all the time to simply extend the term of their office and industrial leases. It certainly looks like an Easy Button, with language about adjustment to a “market rate.” Except it doesn’t work that way at all. It is a siren’s song, and you must resist the temptation. Because the spread between “renewal” rental rates and the actual “price-clearing” market rental rates has never been wider than it is today, sometimes by a factor of 2X or greater.
Read MoreThe Inland Empire Industrial Real Estate Collapse—A Tenants’ Market in the Making
Hughes Marino | Market Reports
May 15, 2025
If you are a business owner or executive team member operating an industrial distribution or manufacturing company in the Inland Empire, you’re probably still picking off the scar tissue from the run-up of industrial rents from 2020 through 2022. The outbreak of Covid in second quarter of 2020 created a run on industrial real estate in the fall of 2020. This was caused by consumers going online to shop and the ports flooding with inbound consumer products that needed to be pumped out of our Southern California warehouses. Pre-Covid, industrial availability rate in the Inland Empire was a healthy 7%. In less than a year and a half, availability rates had gone down to a historic low below 4%, rental rates increased 50% to 90% depending which submarket you’re in, and competition for large blocks of space forced many tenants to sign 7 to 10 year leases where companies were conventionally signing five-year terms.
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