Current market conditions, while showing signs of improvement with strong first quarter results, continue to represent possibly the best opportunities for companies to pursue early renewals and lease restructurings. 

In talking with a friend of mine who specializes in lease restructurings, he emphasized that many landlords have been working with their tenants to combine the costs associated with existing leases with current market rates over an extended new period.  Early lease restructurings have given leasing activities a much needed boost for landlords over recent months and he expects this will continue into the foreseeable future, suggesting continued concern about when economic conditions will improve.

He pointed out that lease restructurings are safe transactions that make a lot of sense for both sides; enabling tenants to generate immediate relief by reducing arguably their biggest expense category after labor at a time they need to do so the most, while providing the landlord with what can be a more stable, longer term tenant instead of a vacancy.  At the very least it assures the landlord they have secured a tenant for the foreseeable future whereas at current rates, that might not be the case.

Similar practices are being utilized beyond leases and applied to bank loans to effectively prevent defaults for much of the same reasons. Hopefully you already addressed your own expense structure, but if not, these tactics may be helpful to you.  Even if you’re a strong performing company, don’t let the opportunities of a good recession pass you by! 

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