Do you have less than 2 years on your office lease? If so, you should take advantage of COVID pricing and incentives provided by landlords. These unprecedented times have given tenants important financial advantages. Here are five key points you need to know about COVID pricing for tenants.
With some help, as a tenant during this COVID era, you will be able to negotiate:
- Lower base rent – Overall rental rates have dropped by about 15% since March
- Abated rent – Landlords have increased the concessions of abated rent by about 25%
- Increased tenant improvement (TI) dollars – Landlords have increased TI dollars on shorter-term leases
- Discounts on parking – Landlords have increased discounts on parking for longer periods of time
- Revision of the Base Year – By providing the Landlord with an additional income stream via a longer-term lease, a revision of the Base Year is a possibility.
The best news? These business points are just the tip of the iceberg that you can leverage to your advantage.
Operating Expense and Common Area Maintenance (CAM) Pass-Throughs – Tenant’s Beware!
You should have a heightened sensitivity to your Operating Expenses in light of the impact of COVID and the Tax Initiative of Proposition 15.
California’s Tax Propositions
Currently, California Tax Proposition 15 – if it is passed – could replace the Proposition 13 Tax Protection. Proposition 15 will allow commercial and industrial properties to be assessed at their current market value. This contrasts with Proposition 13, which continues to tax such properties based on the property’s purchase price with annual increases due to inflation or a maximum of cap of 2 percent per a year.
Be Proactive with Your Operating Expenses
You should be more attentive to your Operating Expenses, now more than ever, given the impact of COVID on the requirements of landlords to address sanitation issues and health issues.
Many landlords are currently sending out supplemental Operating Expense bills and estimates that address the enhanced cleaning services being provided due to COVID. When reviewing invoices, ensure that your Operating Expenses are being billed correctly and that you know your Base Year Cost. How do you avoid these increased costs? With a revision of your Base Year. You should speak with an expert to discuss the complex and costly issue of Operating Expenses and how to protect yourself.
Contact Mazirow Commercial to Help You Renegotiate Your Lease
If you’re still uncertain about how you can be proactive against COVID challenges or simply want more information as a tenant, contact Mazirow Commercial. Our expert advisors can help you understand the tax propositions while evaluating how you can leverage your Operating Expenses during the COVID era. To begin, contact us now at (805) 449-1945.
SCHEDULE A FREE CONSULTATION
Ready to start saving time, money, and headaches on your commercial lease? Schedule a free consultation today with one of our skilled tenant representation specialists.