Written By: Keith Zimmerman, Vice President of Equis’ Austin office
In the world of commercial real estate, the relationship between a business and a landlord is defined by long-term lease arrangements, which often lack the inherent flexibility required for an enterprise to achieve its mission.
Despite the long-term nature of a lease contract, tenants frequently have the ability to realign their lease terms according to their business needs, even when several years remain on the lease.
Through a transaction known as a blend-and-extend lease, tenants can use the allure of an early renewal to renegotiate a lease, often injecting advantageous new terms such as lower rents and additional capital improvements.
For example, high vacancy rates in many markets motivate landlords to consider blend-and-extend transactions to ensure that:
Their buildings are full of credit-worthy tenants.
They don’t incur the risk and costs associated with having to remarket and lease space.
Blend-and-extend transactions allow a tenant to combine costs associated with the existing lease with current market rates over an extended new period.
The result: an immediately lowered rental rate.
This leasing strategy reduces a company’s immediate real estate expenses. This type of stragegy also provides favorable new conditions that can help shape the future of its business.
Determining when to use a blend-and-extend strategy requires a company to confirm that the existing building and area are a strategic fit for the long term.
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Carmen has been a practicing commercial real estate broker with Saurage Commercial Real Estate since 2001. She is a graduate of the Louisiana State University (LSU) E.J. Ourso College of Business and the LSU Flores Masters of Business Administration (MBA) Program with a specialization in Entrepreneurship and Real Estate Finance Her experience includes past employment as Regional Director of Leasing at Commercial Properties Realty Trust the for-profit arm of the Baton Rouge Area Foundation. Carmen’s affiliations include Louisiana REALTORS®, Greater Baton Rouge Association of REALTORS® Commercial Investment Division, International Council of Shopping Centers, Commercial Real Estate Women, Certified Commercial Investment Member Institute, National Association of REALTORS®, and Urban Land Institute. She is also an active volunteer on the board of directors for the Baton Rouge Gallery, LSU MBA Alumni Association, Junior Achievement of Baton Rouge, and the Junior League of Baton Rouge.
Saurage Company, Inc dba Saurage Commercial Real Estate was founded in Baton Rouge in 1991 with the purpose of providing exceptional real estate services with an emphasis on commercial property and property management. Saurage Commercial Real Estate offers to its clients a full range of real estate services including brokerage, investment advising, development consulting, REO disposition specialists, asset management, fee based consulting, tenant representation, and buyer representation. The staff of professionals includes combined experience of 50 years, as well as CCIM Designees and Candidates and recipients of Master of Business Administration.