Strategies for Tenants in Today’s Lease Market

• 7.1.2009

Vacancy rates are rising, rents are falling and prospective tenants in today’s office market have tremendous negotiating leverage. But there’s a catch: the same market forces working to the tenant’s advantage may so severely injure that tenant’s landlord that an advantageous lease deal can be put at risk. Today’s tenant must simultaneously exploit its landlord’s precarious financial position while also protecting itself from the risks attendant to having a landlord in distress.

In an article originally published in the Spring 2009 T3 Advisors Quarterly Newsletter, WilmerHale Transactional Partner Paul Jakubowski considers the deft touch a tenant must employ to maximize its leverage without pushing too far and to take measures to protect its lease deal from future landlord distress. He explores such issues as subordination, non-disturbance and attornment agreements; recognition agreements; the possible loss of tenant allowances and buildout packages; landlord and sublandlord bankruptcies; and the protection of security deposits. To read the full text of Jakubowski’s article, please click here.

WilmerHale’s Real Estate Practice Group is broad-based, with significant experience in private equity investment, distressed real estate, development and land use, pension and endowment fund investment, retail, mixed use, senior living and life sciences. We collaborate with colleagues in our Tax, Litigation, Securities, Labor and Employment, Fund Formation, Bankruptcy and Environmental practice groups to serve investors, funds, financial institutions, developers, operators and tenants of all types of real estate. For more information on this practice, please click here.