The market and your commercial lease

A number of big-name commercial real estate companies have been making similar predictions about the market in 2014. Savills and JLL Australia (to name just two) have released reports cautioning that there is increased competition for premium-grade real estate and limited supply.

PropertyOz released this article in March, outlining a tough market in the first half of the year and increased foreign investment in premium capital based on a report by JLL Australia. One month later, in April, Property Wire released this, reporting the same thing but backing their assertions with data released by Savills.

At TRS, we know that it is a tenant’s market. It is time for tenants to take full advantage of the current market and negotiate the best deal possible.

A commercial tenant could not be blamed for concluding this means a tough market and higher prices. Both JLL and Savills have a vested interest in driving tenant panic and driving up prices. If they report that prices are high, tenants will expect to pay more, and be happier with less. As these companies represent the landlords that own these buildings, it is no question that they have a vested interest in having a perceived lack of product available.

The truth is, the reporting is not accurate. At TRS, we know that it is a tenant’s market. It is time for tenants to take full advantage of the current market and negotiate the best deal possible. If you use a conflict-free tenant advocacy business, you will ensure you have access to the whole market and get a competitive deal.

For a bit of perspective, have a look at this opinion piece by the Property Observer cautioning us; “don’t give emphasis to month-to-month data, which is confusing and misleading”. It’s not specifically about the commercial market, but gives an overview of the hype and sense of urgency in day-to-day real estate reporting that simply doesn’t exist in the slow moving world of commercial leasing and tenancy.

As a commercial tenant, when it comes time to review your commercial lease, it is important not to give too much weight to these reports that can be based on premature data and come from sources with a conflict of interest.

If you are considering having a tenant representative when going into lease renegotiations, you have to ask whether you would like a tenant advocate that represents both tenants and landlords, or one that is truly independent. The answer is easy. At TRS, we can guarantee the following:

  • We work exclusively for tenants and do not take any owner listings.

  • Every search we do starts with every available listing and we narrow the field down based on your unique requirements rather than on what pays the highest commission.

  • Conflict-free expertise

What matters is the long term trends and having a full understanding of market movements. Rather than getting caught up in the short-term fear mongering by large commercial real estate companies, get a tenant representative with no conflict of interest and expert understanding of the market – we just want to get you the best deal.

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