We’ve seen hundreds of billions of dollars go to banks and Wall Street and so far not much stimulation has occured. We hear that much more money is need to be a proper stimulant and maybe thats true.  In fact most of America is staking their financial future on the premise that the government’s Stimulus Package will work.

In the meantime property owners are often being put in a position of having to offer their own Stimulus Plan in the form of rent concessions.  Many times tenants feel that the property owner has no cost of doing business and what ever money comes in goes to the bottom line.  That is borne out but the size of the rent concession tenants often request or even demand.

As a property manager and owner we are getting more and more requests from tenants to reduce the rent. However, many seem to think that the property owner is going to have to cave in to these requests or will lose the tenant.  The request can be a 50% rent reduction as though there is no hardship attached to the landlord taking such a cut in income.

There is little thought given to the fact that if income is reduced so drastically the landlord may be in jeopardy of losing the property to the lender.  There is also little thought often given by tenants that perhaps they should speak to their own bank to see if they can get a break on their loan payments or do a total loan modification, perhaps in combination with some sort of rent concession so that everyone can get by these tough time.

I advise business people to prepare a thoughtful business plan that may include a reasonable rent concession.  This plan should show the businesses ability to survive during hard time with all creditors involved in keeping it afloat.  If the tenant waits until they are already in serious default on the rent it becomes problematic to solve their problem either with the landlord or their banker.  Waiting until hope is gone is not a good way to keep one’s business functioning. 

Lets hope that the government Stimulus Plan will achieve it’s purpose and bail America out of its financial doldrums.  In the meantime business and professional people in need of rent relief will hopefully look at the entire picture for relief and not put all their eggs in the landlord’s basket. 

Now imagine your surprise to receive an email with 50 choices on it. How can that be? You only want to be in top notch buildings and only within a mile of the airport. 50 Choices???? That’s absurd.

Absurd? Maybe. True? Definitely.

What happened to all the office tenants? That my friend is the big question these days. Office building owners are giving bonuses to brokers to do a lease, they are giving bonuses to tenants to do a lease and they are giving bonuses to existing tenants to not opt out of their lease.

I know that officials in the Federal Government are loath to use the word recession but an awful lot of ordinary people think we’re in one now. Office tenants seem very fearful of making a move in case business gets worse than it is.

Interestingly this makes for a very good time for a tenant to cut a great deal for the next few years. However, it is precisely at times like these that most people opt to do nothing out of fear. In many cases it’s an irrational fear but in many other cases the fear is justified.

Us, commercial brokers and office building owners may be looking for tenants in all the wrong places but so far no one has told us where the right places are. Any one who knows of these places please feel free to share.

For more information about Orange County Office market see this article in National Real Estate Investor online edition