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Hidden Leasing Costs - NJuly 2023
It is interesting to note that after salaries, the second highest business cost are the rental costs for leasing a premises. In many cases the total cost of occupancy over the term of a proposed lease, is not fully understood, or calculated.
Various additional costs such as outgoings, parking, fitout costs and make good, together with leasing incentives, are not factored into the decision making and evaluation process. Accurate budgeting will reduce risk, and save time and money.
The most appropriate financial analysis to use when considering leasing a property is to establish and compare 'whole of lease' term costs.
If you are thinking of moving, then now is a great time to plan the move, to ensure the best outcome for your business, money and reducing risk in the process. This will give you peace of mind, and the confidence to make an informed decision.
How to Save Money in the Current Climate Q1/2024
Do you know the market and the effective leasing rates and incentives available?
If you are nearing the end of your lease you need to consider the most cost-effective solution and the right outcome. You do not want to pay too much rent and miss out on leasing incentives. Experience counts when dealing with agents, analysing rental deals and negotiating lease terms.
Who is Representing You? Leasing agents represent the Landlord – Why be informed about the leasing market by the Landlord’s agent?
Seek independent professional property advice.
Sourcing New Premises – The best method is to test the market to ensure 'competitive tension’ is injected in the accommodation search process. The most appropriate approach is to issue an Accommodation Brief to the market. A NPV analysis will initially determine the most cost effective options available to initially screen out unsuitable properties. Then, a cost-benefit analysis will further highlight a shortlist of suitable properties to consider.
Did you know that real estate occupancy costs are typically the second largest expense item for a company, after salaries?
Negotiating Commercial Lease Terms – Negotiating lease terms is unlikely to be your core business.
There are many pitfalls in the negotiation of the terms and conditions in a Lease agreement. This may be in the form of rent reviews, fitout process, make good, sub-leasing and lease options available. Intercommercial Property Group has extensive experience in these matters and can negotiate effectively on your behalf.
What are the Savings? – In most cases, tenants will pay more than they should (3% - 12% more), as they are not be able to negotiate the best terms in the market. The solution is to seek independent advice from an expert.
