New Lease vs. Renewal Breakdown

March 25, 2020

We represent tenants looking for office space in metro Phoenix and across the US.  Some clients are CRE savvy and others negotiate a lease once every 5 years.  One question I hear all the time is, why are rents so high?  Or, said another way, how does my rent break down? 
 
Below is a cool graphic we created as an example breakdown of a Full Service rent lease rate in the Metro Phoenix market. This graphic allows us to see how Full Service rent is segmented by landlords comparing renewals and new transactions and where your rent dollar goes.
 
Three key points:
 

  1. Amortization of Tenant improvements eats up a large portion of rent on new spaces.
  2. Operating expenses account for approximately 30% of your rent dollar.
  3. Depending on how well you negotiate, the Landlord could get 17% to 40% of your rent dollar. A huge swing.  This tells you that hiring a great broker (like Coppola-Cheney) is paramount.  Keep in mind, with this slice, the Landlord has to pay his/her debt service.

Call us if you are thinking about your office lease.  We can break it down for you, and ensure you are getting the best deal.

Craig
602.954.3762
ccoppola@leearizona.com



Click here to view the graph larger. 

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