Route 21 Corporate Park

Clever tenants are the ones signing long term leases with good packages…

Mr_ Clever

The more astute tenant is taking advantage of the low interest rate – and the perennially high level of office vacancies – to negotiate preferably packaged long-term leases, a move that could bring them significant benefits over the next three to five years.

This is according to Org Geldenhuys, managing director of property developing and management company, Abacus DIVISIONS “The more astute tenant is taking advantage of the current market situation and is going for longer term rental contracts – but with very favorable rental options, including small, or no, annual increases for the time period of their lease. More and more tenants are opting for leases as long as five years – but, for that, they are pushing for really material locked-in benefits.”

Geldenhuys said they are not only getting leases at good prices, but they are squeezing landlords for a host of additional benefits, such as better parking, more space, better amenities, rebates on water and lights and tailor-made office improvements, or refurbishments.

“Many landlords are in a corner with the depressed state of the commercial property market and are more likely to get their arms twisted now than ever before – just to secure long-term tenants.  This trend could see a reduction in office vacancy rates in the foreseeable future, which is certainly good news for the market  Those landlords who can ride out the storm for the next few years- by offering tenants as many thrills and spills as possible – are likely to be the ones that will survive, and perhaps prosper.”

“Those landlords unwilling to barter, however, may find their property portfolios with empty holes as they have less rental sign-ons, as well as the added risk of current clients moving over to other landlords, who are willing to offer more preferential deals.”

“This trend is likely to pick up during the course of this year as tenants hustle to get the best deals they can for the next five years, with many being able to peg their rentals at very favourable rates for this timeframe, giving them room to grow as the market improves.”

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