Posts by David Marino

Reducing Real Estate Expenses by “Restructuring” a Commercial Lease

David Marino on 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.