100 Words of Advice to Tenants

Statewide and regional press recently called on me for market commentary and advice to the commercial tenant community. Perhaps you’ll find these pearls to be of use to you and your company…

100 Words of Advice to Tenants

When the California Real Estate Journal/Daily Journal (the Statewide legal rag) called me for a condensed piece of market advice, this was our sound-bite:

“Know that we specialize in representing tenants, only. Tenants shouldn’t be concerned about picking ‘the bottom’ of the economic meltdown. Our mantra for tenants during the past 27 years is to lock in affordable rent for each and every year of your lease; commit 8% or less of your gross revenue to rent. San Francisco’s office market, like every other major city on the planet, is upside down…presenting terrific opportunities for tenants to achieve wonders through meticulously planned and heavily negotiated deal-making. Rents are already cheaper than in 1982, the year we started in the business. While Rome is burning, protect yourself on the downside but lock in long-term rental rates.”

Download the full article [PDF]

In the Press Room, The Registry Commercial Market Report

Reporter John McCloud’s coverage on the commercial real estate situation brought him to interview our principal, Dan Mihalovich. Excerpt from “Office Tenants Shun Tenants’ Market. Some landlords resist taking steps to entice business to commit to space”:

Dan Mihalovich, a tenant rep and principal of San Francisco-based Mihalovich Partners, believes landlords will ultimately be forced to adapt to tenant demands, though he concedes they may have to be dragged to that point. “It’s the consumer and commercial tenants who will dictate the plight of the commercial real estate markets, not building owners, no matter how much landlords paid for their buildings,” he says. “The market fundamentals will always prevail over time.”

In Mihalovich’s opinion, tenants have significantly more clout than they realize, not just now but most of the time. He considers brokers partly at fault for this, because they do not press landlords for more on behalf of the tenants. “In the 27 years I’ve been in the real estate business in San Francisco, probably 22 years have been a tenants’ market”, he says. “The exceptions were the dot-com boom and ’06 and ’07. Tenants can definitely get more than they’ve been led to believe.”

“We’re obviously going to be in a tenants’ market for the next three to five years and potentially longer. Property owners are going to have to bend at some point.”

Download the full article [PDF]

We believe that critical thinking and sharp market analysis form the core for shrewd negotiating on behalf of our clients. Obviously we have a lot more to say on the topic—review our record of advice during the past 10 years for more. If you would like to schedule a meeting with me and our team, please contact us. Tenant representation is our sole focus.

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