Reducing Real Estate Expenses by “Restructuring” a Commercial Lease

David Marino | HM Blog
January 21, 2021

When the business community begins to open back up this year, many business owners and executive teams are going to look around at all of their excess space remaining from reductions in force and team members working from home post-Covid and wonder what to do about it. With the business community considering how to rebuild their organizations, there will be anemic demand for new office space. Those office tenants already planning to come back are generally thinking they need 50%-80% of their pre-Covid footprint. As tenants’ leases expire, the commercial real estate market is experiencing “negative net absorption” as tenants with office leases expiring downsize and give space back in droves. At the same time, both sublease inventory and space given back to landlords from tenant defaults is flooding the market. This combination of weak demand and spiking supply is causing commercial rents to crash, and a spiking in concessions such as free rent, moving allowances, parking concessions and shorter lease terms, creating the strongest tenants’ market since the 2000 Tech Wreck.

Who is Hurting & Who is Thriving in Los Angeles Commercial Real Estate

Tucker Hughes | Market Reports
November 10, 2020

Now that we are two full quarters deep into the global recessions caused by the COVID-19 virus, the effects of the pandemic are becoming crystal clear in the commercial real estate industry. Everyone understands that the retail, hospitality, travel and leisure, and entertainment industry categories are completely distressed, so much so that we have seen tens of thousands of businesses already lost across the country. There are, however, several bright spots in the economy despite the challenging circumstances. For example, we have not seen as significant of a loss of the businesses that occupy office facilities as many had anticipated, and the industrial and lab sectors of the space market economy have generally outperformed even compared to the pre-pandemic days.