Comments by: Peter RiguardiPresident, NY RegionJones Lang LaSalleNew York City

It seems that brokers and owners have certainly taken it on the chin lately. First came CoreNet Global’s study revealing tenants’ beliefs that those negotiating and holding leases don’t care about their flexibility concerns. Then came last week’s feedback poll echoing that belief–loudly–by a three-to-one margin. Commentator Peter Riguardi is frank–and fair–in his reaction to both.

“The top-level of brokers are sensitive to the need for flexibility and see the benefit of spending time and negotiating properly for that flexibility. By contrast, younger less-experienced brokers haven’t witnessed enough situations where they’ve seen their clients’ needs change so much that the advent of flexibility would have helped them a great deal. As you cascade up the ladder to those more experienced brokers who are dealing with larger and more sophisticated users, whether they are corporate or entrepreneurial tenants, they’re going to want flexibility in their lease document.

“And yes, you’re going to have to pay for it, either directly through higher costs or indirectly through trade-offs and losses in areas that you might not have lost for the fact that the landlord gave you flexibility. Flexibility to me is an insurance policy. It will cost you something and you may never use it but, boy, when you need it and it’s there, it’s a welcome relief.

“With landlords, it’s a situation of supply and demand and valuation. They’re not going to want to give up so much flexibility to a tenant that it will affect the valuation of their property. For instance, unencumbered cancellation rights to a lease obviously can have an adverse affect on the landlord’s valuation.

“But no one really knows what flexibility is worth, because a landlord may feel like he’s giving away a lot while the tenant feels he’s giving away nothing because exercising the option is such a remote possibility. So there’s no accurate barometer to gauge the flexibility aspect of a lease. But when you represent a tenant you need to determine their priorities, and if flexibility is a priority, then you have to find a landlord who’s willing to give it up.

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