The business landscape has changed dramatically in the past 15 years.  Small business start-ups have the potential to grow into well capitalized enterprises much faster and with less human capital and equipment with the powerful help of the internet and social media.  Add to this the fact that technological changes come with such speed that businesses – start-ups and established enterprises alike – really can’t know what form they might morph into – or whether they will even be around – in just a year or two.  This goes for all commercial space users: office, industrial, and retail.

 

As a tenant rep broker, I see evidence of this every day.  The default five year lease term for a bricks and mortar space has become three years and many tenants come to me looking to limit their commitment to two years or even just one.  But this cautiousness is exposing a disconnect between the business objectives of tenants and landlords: the landlord naturally seeks the security of a long term lease contract with an economically sound tenant while the tenant wants to mitigate the uncertainty of the future with a shorter lease commitment. 

 

There are landlords that will simply not consider short lease terms and if they do, they will not pony up the capital to modernize, refurbish, or remodel the premises.  And they don’t want to repeat the vacancy/marketing/leasing cycle again barely a year or two in the future.

 

There is no magic solution to this problem.  Tenants need to realize that capital for tenant improvements is at stake.  If the landlord is even willing to enter into a short term lease, the premises need to fit the tenant’s needs as-is.  That takes spaces that might otherwise be adaptable out of contention and limits the tenant’s choices to spaces that are a perfect fit.  I call this “hitting a bullet with a bullet.”

 

The art of tenant rep brokerage is to manage expectations on both sides and create a target that everyone can aim at.