Studley Touts Tenant Opportunities

SAN FRANCISCO- With building values now down approximately 50% from their peak, tenants should be negotiating lease terms that ensure building owners are passing along their savings. This is the advice of Studley, a New York City-based brokerage firm that represents only tenants.

“Tenants should negotiate lease terms that require landlords to seek property tax reductions and, if successful, to pass through savings, particularly in the case of anchor or sole tenants,” according to the company’s preliminary fourth quarter report. “Additionally, while many gross leases contain provisions whereby the tenant is responsible for increases over base year expenses, tenants should seek the benefit of decreases as well. Owners of more than 1,000 commercial properties in San Francisco have asked the Office of the Assessor-Recorder to have their property taxes reduced this year, based on lower building values.”

As previously reported on GlobeSt.com, Brookfield Properties has foreclosed on 333 Bush St., while Morgan Stanley, one of San Francisco’s largest landlords, is preparing to give back to its lender five major downtown office properties. Due to the short-term debt that was used to purchase over 60% of the commercial office buildings in San Francisco between 2006 and 2008, Studley believes more properties “are bound” to follow a similar path.