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Current Lease Impact

Estimating A Timeframe

Some of the major factors impacting timing are your company's real estate requirement, the complexity of your specialized needs, particularly telecommunications; trading floor and/or special engineering requirements; the efficiency and timeliness of your companyís decision making structure; financing and funding hurdles to meet the costs of the relocation; and the extent of construction required in your chosen site.

Some phases of the three-part process (i.e. Search, Negotiate, Finalize) are generally easier to predict. For example, lease negotiations, particularly for users under 10,000 square feet, should be concluded in two to four weeks. Oftentimes, the landlordís attorney will not send out the first draft of the lease for about a week. Our time and process projections exclude any delays caused by existing leases or other obligations. Further, they are only estimates and may be impacted by any special circumstances. Based on our experience, and with the above factors in mind, we provide some rough benchmarks for each of the major phases of the project.


Your Current Lease May Impact Your Plans

Before making the decision to relocate, there may be terms within your current lease which may impact your plans:

Expiration
Rights
Sublease/Assignment
Restoration

Lease Expiration

While this may sound simplistic, the expiration of your existing lease, if you have one, is usually the issue that drives the entire occupancy process. Holdover rights (see below) are usually very unfavorable to tenants. In the typical lease, landlords often have the right to at least 1.5 times the rent, if not 2 or 3. Further, landlords in tight markets are unlikely to be happy to allow you to stay in your space past lease expiration because they may have already committed your space to another company. The landlord may incur penalties if you do not vacate on the appointed date. If you are in a situation in which your lease will expire before you can relocate, contact the landlord or its agent when you know and attempt to negotiate an extension. Although financially it may be onerous, it will be better than having your company and employees being evicted from your space with no place to go. Generally it takes two to three months for the legal process for an eviction to be complete, but it is a situation we recommend you try to avoid.

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Holdover Rights

The right to holdover in your premises past lease expiration is not automatic. Leases generally provide for the terms of holdover rent, but the landlord typically still has the right to begin eviction proceedings at the end of a specified time period. Holdover rent typically ranges from 1.5 to 3 times the rent you paid during the last month of the lease.

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Sublease/Assignment

Should you need to relocate prior to your lease expiration, you should carefully re-read the sublease/assignment clause in your lease. You may or may not have rights to sublet without the landlord's consent and the terms on which you are allowed to sublet may be onerous to you. Also, pay particular attention to whether any profit can be made from subleasing. Generally, the landlord takes all the profit or a tenant may get a 50/50 split after the cost of subleasing.

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Restoration

Restoration refers to recreating the condition of your space when you initially leased it. You should check to see if this is required as it could be a substantial cost to your company. Generally anything affixed to the premises (anything nailed, screwed or glued down) stays in the space and remains the property of the landlord. In the early 1990's a landlord on Park Avenue successfully used the restoration clause and the cost of reconstruction against a commercial bank to force it to comply with the landlord's version of sublease profits. At stake was almost $90 million. The landlord won.

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