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The slowing economy may have repercussions in terms of your office--you may require less space... or you may simply want to take advantage of changes in the real estate market. Current conditions suggest many firms will be able to negotiate more favorable leases in the months ahead.
It's best to consider your firm's real estate strategy as a "work-in-progress" that you periodically review in light of your business plan, says Stephen Goldstein, senior vice president with the Washington, D.C. office of Julien J. Studley, Inc., a national commercial real estate firm. He and Robert Manekin, a principal with Manekin Brothers Abeshouse, a commercial real estate firm in Baltimore, explored the topic of lease negotiations at a recent conference for legal administrators. Their suggestions are equally helpful for CPA firms that want to exercise changes in their leases.
Lease restructuring is an ongoing process.
"You may be halfway through a 10-year lease with a reasonably attractive rental rate, but you may need work done in your space that you don't want to pay for with cash," Manekin said. "By restructuring your lease, you may be able to get all that work done and pay only a slightly higher rent."
Where to begin. Below are questions and answers from Goldstein and Manekin about pivotal issues relating to lease negotiations:
Question: When is a good time to restructure your lease?
Answer: It depends on the terms of your current lease, but you must stay up to date on what's happening in your building and the market in your region, Manekin said. In most instances, Goldstein added, market conditions, a building sale, more vacancies in the building your CPA firm occupies, or a change in your firm's business plan can move you to restructure your lease.
Q: What market conditions are likely to affect your negotiating position?
A: According to Manekin, changes in interest rates, occupancy/vacancy rates in your area of the country, and the like should immediately signal that it's time to look closely at your firm's lease document. Any change such as those mentioned above creates opportunities that can work in your CPA firm's...