Greater Boston Office Buildings Provide Suburb Appeal
Budget relief can come in many forms, and smart companies are taking a close look at the details to save on spending. Technology companies in Boston are no exception.
There’s not much they can do about insurance costs, real estate taxes, and payroll, so what gives? Perhaps savings can be found in the monthly cost of rent.
The prestige of a Boston or Cambridge address loses some appeal when the rents creep up to $80 or $90 per square foot. Landlords may be willing to discount the price during a renewal, but the question is how much and is it enough? The tenant can compare that pricing to what is directly available in nearby suburbs, typically at $10 per square foot less than downtown rates, and the price becomes be too good to ignore.
In a February 20th, 2009 article posted by Inside Real Estate on high-tech firms in the Boston area, Bridget Botelho writes
“…Tenants are approaching leasing decisions with extreme caution and renewals have become increasingly popular. Many of the companies that are in leases they signed four or five years ago expect to get their leases renewed at lower prices, or they can find less expensive space once their lease is up…”
In some cases, these firms cannot justify the expense on rent when viable alternatives are less than 10 miles away. At the least, a responsible tenant will conduct an analysis of rental expense and consider all alternative options before signing a new lease.
The author of the article goes on to say
“Landlords are likely to continue losing tenants throughout 2009 due to company downsizing and bankruptcies, and feel pressure to lower prices to attract new tenants…”
Technology companies in Boston have the option to renegotiate in place, and may have success based on a landlord’s fear of an empty building. Armed with strong data, a successful technology firm has a strong leg to stand on in this type of negotiation. The worst the landlord can say is NO, and the tenant knows that there are alternatives available just around the corner.
Landlords in the b must prepare for this opportunity and appropriately market vacancy to firms who may be in the process of making a decision. A message to the suburban landlord with large vacancy – do not lament the situation! Find a way to be one of the top alternatives on the list for a nearby high tech firm and chances are the deal will be too good to pass up.
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