Summary: Jumping from milestone to milestone requires promptly resolving problems to avoid expense increases. Keeping lease costs down isn’t as hard as you may think, but it does require clever efforts to secure fair pricing, your desired design, and on-time completion. Click for more tips.
1. Early Schedule and Design Completion
Be prepared early on with solid and detailed expectations of your vision for the design and timing, which are the critical determinants of the overall cost of the rent. The second half of this responsibility is to make sure that the construction team is informed of these wish list items to prevent any surprises, such as design changes or change orders before the project has even begun.
2. Think About the Constant Lease Strategy
Working with an experienced developer can be advantageous since they can set a lease constant based on your credit, current interest rates, the area you are in, the building style, the lease’s length, annual lease increases, and any unique lease clauses.
For instance, if the lease base is $1,000,000 and the lease constant is 8 percent, you can anticipate the starting lease to be $80,000 yearly.
3. Recognize the Lease Market
As was previously explained, your final lease cost will be determined by the “lease basis,” which is the project’s entire development cost. To have a more precise end goal, be aware of all the hard and soft costs, such as land, site upgrades, design, building construction, contingency plan, and construction financing.
4. Use a Cooperative Strategy
Due to their considerable experience, working with a preferred developer encourages discussing and resolving any pricing and design issues early on. Depending on the circumstances, there may be a chance that they will bear some unexpected expenses if it means keeping the relationship.
Often, a project may need to get started before the lease price is finalized to stay on schedule. As a result, the whole list of project costs will be determined sooner rather than later, depending on when a developer is included in the equation.
Achieving fair pricing, your desired design, and on-time completion requires strategic efforts, such as those mentioned above. However, keeping lease prices low is not as difficult as you may believe.
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