$0.50 decrease for 10yr vs 5yr
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[{"id": "g2tr55w", "text": "What sounds like a joke? Should they ask for more?\n\nYou want to mitigate your risk and increased their risk, so to compensate they reduced the rental rate.\n\nWhat are your rental escalations during the period?", "replies": [], "depth": 1}, {"id": "g2u0bs1", "text": "With everything going on, there is blood in the water for office space. Companies are working remotely and office space WILL take a hit, it\u2019s only a matter of time. I think you should be able to use a little more negotiating power than what you mentioned.", "replies": [], "depth": 1}, {"id": "g2u1z0a", "text": "would counter with 3 year at 30 a square foot", "replies": [{"id": "g2v1pao", "text": "3 yr at $30.50.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g2ud4f1", "text": "DC broker here: Basic Annual Rent doesn\u2019t change much on 5 vs. 10 years, $0.50-1.50/sf is pretty normal, but free rent and TI should be doubled. \n\nEdit: just to answer other questions from other posters, annual increases in DC are normally 2.5% per year for full service office with OpEx and RETax passthroughs. Sometimes 3% in Suburban MD and NoVA. \n\nConcessions have gotten really large, especially in the current pandemic environment. In the core DC downtown market, there are some comps with TIs as high as $150/sf and 2 years free outside of a 10 year term on rates of $59-60/sf Full Service. It\u2019s crazy right now. \n\nFeel free to ask additional questions.", "replies": [{"id": "g2uhcvx", "text": "Oh you are from DC? Then I will clarify. This place is in North Bethesda, MD.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g2uwnpd", "text": "On a longer term lease both tenant and landlord are making a bet.  Tenant is betting rents will rise and by year 6 they will be paying below market.  Landlord is betting on not having releasing costs in year 6 and that rent will note skyrocket.   If it\u2019s good space that is easily releasable I\u2019ll take the risk of a short term deal every day, as a 5 year tenant who does not renew would likely have defaulted before the end of a 10 year lease anyway.  Landlords like to control their destiny.", "replies": [], "depth": 1}, {"id": "g2vornb", "text": "Are you getting any T.I. dollars or free rent? What\u2019s the condition of the space? Do you expect money to build it out?", "replies": [], "depth": 1}, {"id": "g2vq32r", "text": "Discount the cash flows, yearly rent, TI you are getting to today\u2019s dollars  and compare.  Not rocket surgery!", "replies": [], "depth": 1}, {"id": "g2w5sc9", "text": "Keep in mind TIs and rent free periods is easier to ask for than a lower rent if the LL wants to keep the valuation of the property up.", "replies": [], "depth": 1}]