Overhead Reductions

[xcesiv]

Good afternoon everyone.

The company i work for is in a sticky situation financially and i am on a war path to reduce all unneccessary overheads and to reduce all other expenses to the minimum.

1 large overhead we have is our Rental expense. i want to go to our landlord and ask for a reduction in the lease and building expenses.

We currently pay all overheads for the property including rates, insurance, etc and i need to cull as much as possible.

Our lease expires in less than 6 months so i thought we might have a chance.

Does anyone have any suggestions or advice to getting a successfull answer to my mission.

Thanks

Warren

 

[wylie]

I sure hope that Dazz is not your landlord........

On a serious note - if your lease is due in six months, how easy would it be to move operations to a less expensive place. It would be a pain in the rear end, but maybe if you find an alternative place of business, you could use that as leverage with your current landlord.

I wouldn't think your chances are good for a reduction, especially if your landlord knows that it would cost a lot to move your operation elsewhere. Your landlord may be planning on increasing the rent when renewal time rolls around.

Could you sublet part of your premises to someone else to offset your expenses, or would that not be allowed?

 

[xcesiv]

It wouldnt be hard to move.... there wouldnt be a loss in sales, just time, effort and probably about $10k in expenses to move. this could be saved with the right lease on another place over the year, and 2nd year is savings.

I was thinking of using the " We will have to look elsewhere" line if things dont change.

Also using a bit of the scare tactic of "you dont want to have a vacant premisis now do u during these hard times"

The premisis is not right for us anyway. Not enough parking, bad layout, etc. We have alot of reasons why we should move, but I would rather stay here and get the discount than have to move out. We get by with the parking and layout.

 

[gman]

We had a similar situation with our tenant, they asked for a rent reduction 6 months before their lease was to expire. We agreed to a rent reduction providing they would resign a lease. 3 months into the agreement they advised they wouldn't be resigning a new lease. They offered to pay back the amount of the rent reduction.

Just ask the landlord for a rent reduction or rent free period or no rent increase or some kind of incentive for you to resign.
Can you show the landlord similar properties being offered at a cheaper rent rate or incentives being offered to you to sign up at another please, if so the landlord might have something to think about ,if not good luck.

Good luck

 

[Jazza]

Have a chat with LL and see how open he is to negotiating.

You might be able to offer a longer lease for less $$ to give him reliable return.

 

[xcesiv]

The advantage of our company is we dont need shop front accesss... Just space and parking for staff... Our clients dont visit very often so 1-2 customer car spots and 6 or so staff parking spots.

Dont need a show room, 3-4 offices and a large office for the main staff...

Our office is a stupid shape aswell... the size might be there, but its not 100% utilised, we could get a 60-75% smaller place if the layout was better...

This gives us alot of flexability to where we can move too...

I will do some research on this place and other similar places.

The incentive to the LL for giving us a reduction will be that we will sign a new lease. We have no problems with signing a new lease if we get what we want.... a rent free period would also be a great option.... instead of a discount over each month, a few months free would be great. This will help short term cash flow issues

 

[graisme]

if you suggest that the landlord reduces the rent, it effectively reduces the overall value of his commercial investment. if he/she is even slightly savvy, that wouldn't be likely. however, there are other ways around that.

for instance; offer to continue the lease at your current level but have the landlord allow some free time each year. this is equivalent to reducing the rental but your lease still states that you pay $xxxx.

the church that i go to is currently negotiating with the landlord of new premises. the current offer is that the church pay the asking rent but that the landlord donate 2 months per year back to the church. it was the landlord's idea. it's a win/win for both of us.

if you can come up with a win/win, you're both likely to be somewhat happy.