As we continue to consider the impacts of the COVID-19 pandemic and subsequent economic shutdown, let’s turn our attention to the area of heavily improved industrial buildings, those with greater than 5% to 10% office build out. Many companies presently doing a property search and comparative analysis with their Broker/Agent have now realized that while their warehouse requirement has remained, the office size portion of the requirement has diminished. Companies are finding office employees can do much of their work from home. This holds true for office employees in warehouse buildings as well as high rise office towers.
So, what can a company that is looking for space do when an available building provides essentially everything that company needs in a facility but has too much office? Conversely, what can a landlord do when a tenant will not offer or move forward on their property because the tenant does not want to pay for extra office they will not use.? Answer: (i) Have the Landlord remove the unneeded office space if that does not reduce the total building square footage, or (ii) Discount, or back out, the unneeded office space from total rent calculation (see below example).
Christopher J. Destino, SIOR, a Principal at Lee & Associates, is an engaging, responsive professional who enjoys working closely with his clients and helping them succeed.