The bargaining positions of the two parties can play a major role in commercial lease negotiations. Many things can impact what sort of bargaining position a property owner or prospective tenant has in such negotiations. One is the conditions of the local rental market.
It appears that the rental market for office space here in Orange County is currently moving in the direction of being a landlord’s market.
For one, rent prices for office space in the county have been going up. It is estimated that, in 2015’s third quarter, $28.59 a square foot was the average rent price being asked for when it comes to such space. This is 12 percent increase from a year previous.
Also, vacancies are down. According to estimates, the vacancy rate for Orange County office space for 2014 was 14.8 percent. As of the third quarter, the vacancy rate for 2015 was only at 11.7 percent. Lower vacancy rates in a rental market generally mean a lower available supply of properties to rent, which can be beneficial to parties looking to rent out a property to tenants.
So, market conditions may currently be shoring up property owner bargaining position when it comes to office space rentals.
Of course, the relative bargaining positions of the parties is not the only thing that can impact how commercial lease negotiations go. Strong bargaining positions could be squandered away by unwise actions during negotiations and weak bargaining positions could be shored up by effective negotiations tactics. Commercial lease negotiations can be complex and it can be critical to avoid missteps in such negotiations. Thus, whether a person is a commercial property owner or a prospective commercial tenant, they may want to have an experienced real estate lawyer’s guidance when in such negotiations.
Source: The Orange County Register, “O.C. office rents soaring 12% in a year,” Jonathan Lansner, Oct. 7, 2015