Lease Audit: Reviewing the Cost of Amenities
In the years just before the COVID-19 crisis, office buildings and commercial real estate began offering more amenities than ever within their facilities. Fixed space amenities such as fitness centers, tenant lounges, rooftop spaces and conference facilities, as well as services like restaurants, childcare, valet parking and organized “tenant-only” events, improved the workplace for tenants and their employees. These updates also made buildings more desirable for prospective tenants and, therefore, more competitive in the marketplace. Many new construction properties included spaces for these popular amenities. Landlords in older buildings invested in new furniture for lobbies, and renovated existing space to add amenities and enhance common areas.
Now, in these ever-changing times, we have seen many office spaces left empty and unused, as the workforce shifts to accept more widespread hybrid and remote work options. These luxury amenities that once attracted tenants now sit unused and underutilized. Moreover, would-be tenants aren’t just renting in lower numbers, but those who are still seeking out real estate for rent are shifting their desires to seek out spaces where hybrid and remote work teams can co-work or host much smaller functions than seen in pre-COVID workspaces.
Amenities, like locker rooms with showers, eat-in cafeterias, lounges, and game rooms, have become less sought out as tenants prioritize real estate that includes private spaces, physical distancing, outdoor areas, improved air quality, and touchless automated technologies to reduce physical touchpoints and limit the spread of COVID-19 and other illness.
Adapting in Times of Change
It’s more important than ever for businesses to review their corporate real estate strategy. It’s important for tenants to have a complete understanding of the expected costs over the life of their lease. Having an expert consultant review the lease can help gain a more accurate picture of the costs and expenses being passed through, and identify aspects that need to be clarified or restricted with additional language.
Our team of real estate and construction experts at Rea & Associates are here to help. If you are seeking guidance about your real estate plans, please contact the construction and real estate services team today to learn more about how we can help you get ahead in these changing times.
By Judy Mondry, CPA, CVA (retired)