CREJ

June 2021 — Office & Industrial Quarterly — Page 19 www.crej.com rate can grow quickly upon lease extension. n Options to consider if square footage decreases. If the overall square footage of the building decreases, understand- ably, this is the most difficult problem to address. No owner wants to make a good tenant disgruntled if they feel they have been overcharged, yet it is doubtful the landlord will desire to refund any rent collected over the lease term. This is a situation in which lease review is most crucial. Calculat- ing the amount of rent that was col- lected based on the inaccurate square footage is a useful tool in determining how best to address the issue. Findings may be discussed with the tenant and square footages adjusted accordingly if the lease states rent as a flat monthly fee for an approximate amount of square feet. Perhaps the landlord will consider providing some rent abate- ment in lieu of a refund. Communica- tion and transparency are paramount. Some landlords elect not to inform tenants that the lease states a greater amount of square footage than what the verified measurement truly is. They may prefer to wait until the cur- rent tenant moves out of the building to change the suite measurement. Be aware that it is not proper practice for a landlord to lease out more area than exists in the building. Whatever option might be chosen, this is an owner business decision that requires research, review of options and financial implications of each, thoughtful strategy and good tenant communication when imple- menting. Once you have determined the strategy to implement correct floor measurements, track your progress by color-coding your tracker accordingly. Use one color for suites that are using the new square footage and another to indicate the strategy as to when the adjusted square footage will be implemented. In the pictured example on Page 8 the building has a 16.2% load factor, but the market can only bear a 15% factor. The vacant spaces and building denominators were adjusted imme- diately. A dummy suite was added to capture the difference in building square footage so that the building denominator is correct. In the “Com- ments” column, the strategy is out- lined. Any suite that now reflects the correct square feet has a note as to when it was implemented. The suites that still need to be updated are noted as well. Using a tracker such as this will help you roll out your implemen- tation strategy. In conclusion, implementing updated building measurements should not be performed without having first analyzed factors such as leases, expiration dates and lending requirements. An implementation strategy should be developed with the property owner and the leasing/ management team. This strategy will determine if the measurements will be revised immediately or if they will be applied over time. A tracker should be utilized as this process evolves. When future changes are made to the building, include the measurement professional who provided the new computations so they can maintain in their records for future use. s Hanner Continued from Page 8 almost exactly as they left them in early 2020, but most will have to make some kind of change, whether it’s staffing plans, technological infra- structure or an entirely new office space. Shifting to a hybrid approach, for example, probably means upgrad- ing technological capacity for file transfer and virtual private networks, while reduced staffing numbers could mean moving to a smaller office. The combination of fewer peo- ple, but each needing more space for social distancing, however, might bal- ance out in your current space with- out having to increase or decrease your footprint. And then there are the lease options to consider. COVID-19 has increased office vacancy, particularly in downtown Denver. The availability of space for sublease nearly doubled year over year to 5 million square feet in the first quarter. Whether looking for sublease space, renewing an existing lease or explor- ing new options, now is the time for companies to make their move before being back in the office becomes the norm once again. Once that happens, the opportunity to secure more favor- able lease terms, including multiple concessions, will be harder to come by. Regardless of how companies choose to navigate the next several months, one thing is certain: We’re all in a new frontier for the office and Denver’s economic growth will be all the better for it. s amy@tributaryre.com Aldridge Continued from Page 14 and is met with lower-than-average demand. Tributary notes that this should help companies that are in a position, and know what they want, to get into a nicer space at a better rate than would have been fathom- able a little more than a year ago. There are as many possibilities as you might imagine. The unknown of it all is unsettling, but also these times offer opportunities to revisit your strategy, increase flexibility and fine-tune operations in a way that simply never existed before. Taken in steps, and by being authentic and true about your culture and its challenges, this a wonderful oppor- tunity to improve your organiza- tion and take it to new and exciting heights. s martin@venturearchitecture.com Goldstein Continued from Page 14 ricated until a contract is executed. The challenges with the DBB meth- od helped birth other project deliv- ery methods to increase trust and collaboration among project teams and address quality issues that were becoming more problematic. It is important that a project owner understands the advantages and drawbacks of each delivery method before selecting a project delivery approach. s laura.kingfisher@swinerton.com Kingfisher Continued from Page 12