A survey taken among members of the International Tenant Representative Alliance (ITRA Global) yielded surprising results: the number one mistake companies make in the facility acquisition process is NOT ALLOWING ENOUGH TIME.

Collectively, ITRA Global members have an average of 20+ years of tenant representation experience, advising international, national and local commercial tenants in hundreds of leases totalling millions of square feet. This vast experience has shown that facility research, property inspections and comparison analysis can usually be completed in a week or so by motivated companies already familiar with the local market. However, those tasks are only the first steps in a potentially long process. Assuming the space is not going to be occupied in as-is condition, which is possible but rare, several commonly overlooked complications should be factored into the relocation timeline:

When you’re securing commercial property for your company, one of the key factors you need to bear in mind is how long you are going to sign on the lease. As with most things in life, there are expert opinions about what you should do but the ultimate decision comes down to you. So it pays to be fully informed before signing on the dotted line.

Here are a few things that you should know before you make your decision.
 

Landlords like long leases

Perhaps this is not surprising but remember that a landlord will probably have a loan. For every month the property is vacant, it’s another month they have to fund the loan from some other source. As well as this, financers are often keen to ensure that properties have secure leases as a condition of finance approval. This became increasingly evident after the global financial crisis. Stable tenancies also affect overall rental values, which in turn affects the resale value of the building. 

According to the Global Real Estate Sustainability Benchmark (GRESB), Australia and New Zealand lead the way in the global real estate market in terms of sustainability.

The report analysed data from around 637 listed property companies and private equity estate funds, which covered around 56,000 buildings, finding that Australia and New Zealand are leading the way in terms of green builds.

After a number of years of boom, when commercial tenants were often hamstrung by costly commercial leases and conditions, the pendulum has finally begun to swing in the other direction. Vacancy rates in Perth are nudging past the 10% mark and are expected to rise to around 14% by 2016.

What this means for landlords and tenants is that the rules of the game are changing. It’s not enough for landlords to simply charge what they want and expect tenants to meet the rent. It’s becoming a renter’s market and landlords are having to make concessions. Of all which is why the word ‘incentives’ is becoming so popular.

The simple fact is that most companies will only rent commercial property a small number of times during their business career. Yet conversely, landlords and commercial property agents make a living from doing it time and time again. Having the inside knowledge and market experience of an agent or landlord gives them a huge advantage in commercial property leasing, which is why so many tenants end up occupying space that is on favourable terms to the landlord.

In Australia as a whole, and Perth as a case in point, in recent years the shortage of commercial property has worked very strongly in landlords’ favour. However, a recent swing in the other direction has meant an increase in vacancy rates and desire for landlords to rent property, putting the power back in the hands of renters. However, this is only good news if you know how to use it.