Cost-Cutting Strategies for Your Commercial Lease

Seven Ways to Cut Costs in Your Office or Industrial Lease 

While company needs vary from business to business, it’s safe to say that financial management is one of the top priorities for most business owners in the Twin Cities and beyond. Managing cash flow, monitoring profitability, tracking expenses, and making informed financial decisions are each crucial aspects of running a profitable business. In order to maintain financial stability, however, there may be times when you want or need to cut costs. Whether you are looking to improve profitability, maintain competitiveness or navigate an economic downturn, your business needs to eliminate spending – and reassessing your real estate may be just the way to achieve it.

There are several approaches your business can take if you are looking to cut costs within your office or industrial commercial lease. These tactics will not only help you save money but can also optimize your real estate strategy. We suggest working alongside a commercial real estate broker who specializes in tenant representation so that they can help you make the best decision for your business.

Strategic Lease Negotiation

Start by taking a critical look at your current lease to determine areas where you can negotiate cost savings. For a business leader whose expertise does not lie in real estate, this can be challenging to navigate alone. Tenant representation experts can leverage market knowledge and insights to help you secure favorable conditions, such as lower rental rates, extended lease durations, or beneficial lease clauses. Broker negotiation skills are invaluable in ensuring you achieve the most cost-effective lease agreement.

Efficient Space Planning

Through careful space planning, you can maximize the efficiency of your leased area. By analyzing your business operations and future growth projections, it is possible to identify the optimal layout and design of your office or industrial space. This will minimize wasted square footage, reduce unnecessary construction costs and ensure that your space aligns with your specific needs.

Location Optimization

Choosing the right location is crucial in minimizing costs. Identify submarkets and areas with lower rental rates or upcoming market trends that may result in cost savings. Additionally, considering factors such as accessibility, proximity to suppliers or clients and transportation infrastructure can help you optimize location-based expenses.

Tenant Improvement Allowances

Negotiating tenant improvement allowances with landlords can significantly reduce your upfront costs. In short, a tenant improvement allowance is an agreed-upon amount of money that a landlord contributes towards the cost of improvements or alterations to a tenant’s leased space. By leveraging your broker’s industry knowledge, you can secure financial contributions from the landlord to cover renovations, fit-outs, or customization of the leased space. This can alleviate the burden of initial capital expenditure.

Subleasing Opportunities

Explore the potential for subleasing part of your space to other businesses. If your current lease allows subleasing, your brokerage team can assist you in identifying suitable tenants. By subleasing unused areas, you can generate additional income to offset your lease expenses.

Lease Audit and Cost Review

Conducting periodic lease audits helps ensure accuracy and identify potential cost-saving opportunities. Review your lease agreements, operating expenses, and common area maintenance charges to ensure compliance and identify any discrepancies. This process enables you to dispute improper charges and optimize your overall lease-related costs.

Portfolio Optimization

If you have multiple leased locations, a comprehensive portfolio analysis can reveal opportunities for consolidation or re-negotiation. By assessing the performance and financial implications of each lease, you can determine whether streamlining your real estate holdings can lead to significant cost reductions.

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By leveraging these real estate-specific strategies, you'll be empowered to make informed decisions that enhance your cost-cutting efforts and align with your business objectives. We at Rokos Advisors are committed to guiding you through the process and delivering optimal results for your office or industrial commercial lease. Whether your business is in Minneapolis, St. Paul, or in another state, we can partner with you to help you make your best financial real estate decision today. 

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 Ready to reevaluate your business’ real estate and increase savings? Reach out to Rokos today!

We are here for you and happy to help.

Rokos Advisors is an award-winning Minneapolis – St. Paul-based commercial real estate/tenant representation firm specializing in helping business owners find the perfect office or industrial space for their company.

*Article authored by Rokos Co-founder, Chris Rohrer

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