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In today’s challenging economic climate, landlords are beinvg more creative in their quest toretain tenants. “It’ about landlords and tenants scratchingeach others’ back right now,” says Ron senior vice president at . Kastner representecd Crescent Center’s owner, LLC, on the Cadenced Bank renewal, while John Snyder, owner of LLC, representefd the bank. Kastner says in years past, more firms would look at relocation due to spacre needs and budget when their leasewas Now, they aren’t looking as activel y for new space, and building owneres are more willing to listeb and work with “The name of the game right now is occupancy and landlordsd are solidifying what they can get,” Kastner “You’re in business with tenantsa if you’re a they’re your partner.
You have to do whateved it takes to help them get through otherwise you’re going to get the whole space back and that’x the last thing anybody Companies like Cadence will look around to complete their due but moving costs and an uncertain economh have led to more companies staying put. “We lookecd at several locations and none of them made any sense compared to where we Martin says. “We wanted to try to stay This isan ‘A’ buildinf and we would have been looking at buildings. The ones we looked at wouldx have required a lot of work for us to move and get set Class A space averaged rentsof $25.60 a squarde foot in East Memphis and $19.
65 a squarew foot across the overall office market, accordinvg to CB Richard Ellis’ MarketView report for the firsft quarter. In addition to saving moneyg onmoving costs, Cadence Bank negotiatexd a redesigned lobby to add an office for a Also, Martin says the office’s 21 employeeds were pleased with Jane the property manager at Crescent Center. Kastne has seen more tenants initiating conversationsw about renewals forvarious reasons, such as locking into a currenf rate for longer or askinfg for free rent on the front end of the which maintains the rental rate over the life of the term for the Renewals are one way in which especially institutional ones, are safeguarding their investment during a rough time.
“Cash flow is king rightf now and most of theswe assets have to perform to a certain level to meettheir dividends, make their payments or hit the targegt profits of what they underwrote,” Kastner If a building loses a tenant, then the landlore has to spend moneyh to fix up the space for a new Also, it would lose money during the downtime of vacancy. John director of leasing, , is anticipatiny a 12% increase in renewals for 2009 comparedto 2008. Highwoods leases approximately 1.5 million square feet in its Memphids portfolio.
“I think retention is importanr right now because the deal flowis slow,” Mercer “You sure don’t want to lose what you Mercer is seeing more tenants asking for shorter-term renewals, but Highwoods takes each requesty on a case-by-base basis. “We like longer-term leasexs and if there is a shorter-term renewal the rate structurd might beslightly different, but then again renewalws don’t usually require spending the money to improve the space as you would with a new Mercer says.