Any commercial brokers on here?

[Rain Man]

Quick question if you don't mind.

My company has office space in downtown Denver, and we’ve been working a deal with our current landlord to move to a different space in the building. We agreed on a rate and they put the lease together. This landlord offers good pricing, but they’re very hard to deal with and we don’t find them very trustworthy.

Anyway, they sent over the lease, and it contains an expense stop for 2012 (when we first moved into the building). We expected the expense stop to be for 2016 since that’s when our new lease starts. Is it standard to keep the expense stop at the initial lease setting when a tenant is renewing? Or does it usually get updated to a date related to the new lease? How much of a battling point is this? And does it make a difference that we’re moving to a different space in the building?

Any advice would be appreciated. Good advice will be rewarded with a picture of an adorable kitten.

[Amnorix]

Originally Posted by Rain Man

Yeah, the thing is that a 2012 expense stop means that we're covering four years of inflation right from the start. Essentially, it means that the landlord is paying utilities, cleaning, taxes, etc. at 2012 levels and we're responsible for the difference. That seems like a really bad deal on our part and doesn't seem like it's standard practice.

I love the building, but I can't stand the landlord. They're sneaky and petty and try to nickel and dime us, but they're also apparently not bright enough to do research since their base rates are under the market considerably. So they keep ripping us off, but even so it's still a good deal. I don't even know how to react to that. Do I fight the corruption or do I let them win and think they're taking advantage of me when I'm really the one winning? It's a bizarre situation.

Oh, and here's a kitten for you.

Yeah, that's a dick move. If it's a brand new lease, then you should be treated as a new tenant. Remember that they save considerable costs by not incurring any landlord improvements to get the space ready for a new tenant, and they obviously won't have any downtime with the space unoccupied.

I'd go to war over having the base year be the latest year. It's absolutely what a new tenant would get.

If you need a fresh coat of paint or new carpets, NOW is the time to argue for them.

Oh, and a lease option renewal without a currently fixed rent, or a rent that you can calculate (based on CPI or whatever) is completely worthless. It's a promise to talk later, and nothing more. Some people think they're valuable, but they are only valuable if they actually force someone to do something, instead of being so loosey-goosey they're worthless.

[Amnorix]

Originally Posted by Rain Man

I guess I can threaten to walk away again. That seems to make them back down. I really wish I had a better option, though, like perhaps a reasonable discussion.

I can honestly tell you that some people are just dicks. Some people are just sleazebags. And too many people are both.

Unfortunately, I have to deal with this shit all the time.

[Amnorix]

Originally Posted by Chiefshrink

WOW !!

What is in bold is the fact they told on themselves in a lot of ways. They have folded once they will fold again. They like you as a tenant. If they didn't they wouldn't have folded. They are just doing the typical 'how far can we push this guy and continue to get $$ until he say's no" routine. Bullying as Hog put it. There is so much that is so illegal but they also know they can get away with it because most tenants know getting a lawyer is far too expensive in the long run.

Now with that being said, you my friend have all the leverage. Why ? Do you know how hard it is to find good consistent paying tenants that don't raise a peep ?? If I were in your shoes and knew I had the leverage I either put up with it and swallow my pride because you are getting a good deal or......

you can be totally candid/honest with them and tell them, "look we really like your building and like doing business here at this location and you gave us a really fair deal in the beginning but understand since then....l(list off all the complaints) and the common theme of those complaints which is they are always are moving the goal posts and their yes doesn't mean yes and their no doesn't mean no and you can't do business like this. And because of this you are in the process of looking elsewhere because of their lack of professionalism and integrity.

Now with all that being said, you are telling the truth and getting your feelings out on the table being true to maintaining your dignity, however, it's up to you whether you want to bluff with this statement or follow through. But dollars to donuts they will straighten up to some degree and quit pestering you for more $$ if you politely put your foot down on their neck as you force them to either start being professional with integrity or lose a great paying tenant. Bottom line: You are sending a clear message and they know it.

You have the leverage whether you realize it or not and they have folded once before and I assure you they will fold again.

Jesus, I've never agreed with Chiefshrink so much in one thread. Actually, I may have agreed with him more in this one thread than with all his prior posts combined.

[Rain Man]

So I'm running the numbers, and I could move across the street to a very similar place, but it would cost me $15,000 a year more. I can fight them tooth and nail, and while every month's delay will cost me $2,500 due to some lease issues, I could possibly beat them down enough to make it worthwhile on a five-year lease. But that might cause one of my employees to have an aneurysm since she's responsible for planning the move.

Decisions, decisions. But yeah, I might just go the passive aggressive route of getting this stupid deal done and then spending the next five years with a goal of talking one prospective tenant out of signing with them, just for revenge.

[luv]

Originally Posted by Rain Man

/thread

[Rain Man]

Originally Posted by Amnorix

Yeah, that's a dick move. If it's a brand new lease, then you should be treated as a new tenant. Remember that they save considerable costs by not incurring any landlord improvements to get the space ready for a new tenant, and they obviously won't have any downtime with the space unoccupied.

I'd go to war over having the base year be the latest year. It's absolutely what a new tenant would get.

If you need a fresh coat of paint or new carpets, NOW is the time to argue for them.

Oh, and a lease option renewal without a currently fixed rent, or a rent that you can calculate (based on CPI or whatever) is completely worthless. It's a promise to talk later, and nothing more. Some people think they're valuable, but they are only valuable if they actually force someone to do something, instead of being so loosey-goosey they're worthless.

It actually gets a bit more complicated with the whole story, but it continues to work in our favor.

The whole story is that we approached the landlord a year ago and asked about downsizing. Half our company telecommutes now, so we have too much space and rent is expensive. Our win-win was that we would extend our lease that's expiring next year if they would get us out of the larger space and into smaller space. I wasn't surprised when they turned us down, because while it helped us a lot, they were banking that they could get us into a lease anyway and not lose the higher price that we're currently paying. I wasn't happy, but it wasn't unreasonable on their part to say no, so I didn't hold it against them.

Now enter another bigger tenant on a different floor. They're expanding and they want our space. So now the landlord can fill our space immediately and also extend our lease in a smaller space (that's still bigger than the expanding tenant's current space). Total win-win-win scenario here, good for everybody. But the building is now trying to turn it into a win-lose-lose so they can maximize revenue.

So both we and the other tenant have been wanting to move fast, because they need space and we save $2,500 every month if we move to a smaller space. For whatever reason, the building is moving at a glacial pace on this, and then they keep surprising us with weird costs and fees. I think they're trying to pressure us because they know that moving quickly is in our best interest.

We've decided that we're likely going to war, though. We have a lot of leverage, because if we sit in our current lease, they can't lock in the other tenant, and the other tenant is getting pretty ticked off. There's far more pressure on them than us, because I can just ride out my lease and cost them two tenants if I want to be ruthless about it.

So it's a risk management game. Every month of delay costs us $2,500 but if we can get them to the proper base rate it'll save us roughly $18,000 over five years. It's a risk, but I think we can force their hand, and frankly I'm in a foul enough mood to give it a try.

[Dragonocho]

I saw this solved on the Sopranos. Park a big yacht outside the building and blast music til they settle.

[Amnorix]

Originally Posted by Rain Man

It actually gets a bit more complicated with the whole story, but it continues to work in our favor.

The whole story is that we approached the landlord a year ago and asked about downsizing. Half our company telecommutes now, so we have too much space and rent is expensive. Our win-win was that we would extend our lease that's expiring next year if they would get us out of the larger space and into smaller space. I wasn't surprised when they turned us down, because while it helped us a lot, they were banking that they could get us into a lease anyway and not lose the higher price that we're currently paying. I wasn't happy, but it wasn't unreasonable on their part to say no, so I didn't hold it against them.

Now enter another bigger tenant on a different floor. They're expanding and they want our space. So now the landlord can fill our space immediately and also extend our lease in a smaller space (that's still bigger than the expanding tenant's current space). Total win-win-win scenario here, good for everybody. But the building is now trying to turn it into a win-lose-lose so they can maximize revenue.

So both we and the other tenant have been wanting to move fast, because they need space and we save $2,500 every month if we move to a smaller space. For whatever reason, the building is moving at a glacial pace on this, and then they keep surprising us with weird costs and fees. I think they're trying to pressure us because they know that moving quickly is in our best interest.

We've decided that we're likely going to war, though. We have a lot of leverage, because if we sit in our current lease, they can't lock in the other tenant, and the other tenant is getting pretty ticked off. There's far more pressure on them than us, because I can just ride out my lease and cost them two tenants if I want to be ruthless about it.

So it's a risk management game. Every month of delay costs us $2,500 but if we can get them to the proper base rate it'll save us roughly $18,000 over five years. It's a risk, but I think we can force their hand, and frankly I'm in a foul enough mood to give it a try.

This can go for commercial negotiating too.

[Amnorix]

More seriously, sounds like you have some real leverage here. Sounds like you just tell them you're moving to the smaller space for the agreed-upon rent, need the deposit to be based on the new, smaller, space, and that the base year is 2016, and it's all good. Otherwise you will ride out the lease and move on.

Your leverage isn't just you leaving, it's them risking TWO tenants, because the other tenant wants your space.


Though there is some risk on your side. Delay costs you $2,500/month, and then $15,000/year more if you move across the street.

Good luck with however you manage it!!

[Chiefshrink]

Originally Posted by Rain Man

So both we and the other tenant have been wanting to move fast, because they need space and we save $2,500 every month if we move to a smaller space. For whatever reason, the building is moving at a glacial pace on this, and then they keep surprising us with weird costs and fees. I think they're trying to pressure us because they know that moving quickly is in our best interest.

We've decided that we're likely going to war, though. We have a lot of leverage, because if we sit in our current lease, they can't lock in the other tenant, and the other tenant is getting pretty ticked off. There's far more pressure on them than us, because I can just ride out my lease and cost them two tenants if I want to be ruthless about it.

It's a risk, but I think we can force their hand, and frankly I'm in a foul enough mood to give it a try.

Now that you mentioned all the details here, all day long everyday I would set on my original lease 'unless' of course they want to negotiate a new lease at a current proper base rate as you say. Wait it out for sure and call them on their cards by saying, "Hey, you don't have to do all this nickel and diming to pressure me to move if you just renegotiate a fair new contract because otherwise I will continue to set here on the original because I can afford it and I don't think you can afford to lose 2 tenants can you??? Say it casually but matter of fact and I assure you they will respect you even more and will not pester you again after they give you a new deal. Because you are nobody to be messed with any longer because you have exposed them and beat them at their own game. In certain scenarios it's okay to show your cards to push them to the table much quicker especially when you are holding damn near a royal flush and they have a pair a 2s' reminding them that they only have a pair of 2s'. This is what I would do.