Commercial office space lease term

[David Finley]

I have a tenant in office space that’s lease is ending after three years. They are wanting to renew but only for a year. The reason is the state is looking and widening the road in front of the office and they want a quick get away if that happens. Would you all sign a year lease and be stuck when the state starts the road project with an empty building or just start advertising now to get a longer term tenant in there and keep current tenant month to month.

[Joel Owens]

The REAL question is about the road widening and how that might affect the overall value of your property.

For instance is the road going from a 2 lane to a 4 lane, 4 lane to a 6 lane? Are they adding in new curb cuts and putting in a red light at your spot? Are they putting in a median that would make it hard for access in and out of your property? Are they taking by eminent domain some of your property that would reduce alotted parking spaces and affect parking ratio per building sq ft.

Do you own a stand alone building or a space with other inside of a building?

With the road improvement has the state approved the project and ALL funding tranches are ready to go (federal, state, county, city, etc.)?

In GA for instance road projects are backed up for decades in some cases even if already approved. There can be a long time where a project never happens or even if approved can take years or over a decade to start happening from when it is proposed.

Does your tenant rely on consumers visiting their office as a business model? Often small mom and pop type tenants can't shoulder the burden of road improvements that last 6 months to 2 years as it can cause a drop in business. Consumers simply do not want to deal with the (hassle factor) and will tend to go do business elsewhere for a prolonged issue (road work).