Alexander Ustinov, Business Development Director for RD Management, spoke at CRE First. This was the first gathering of real estate market experts this year.
The upcoming year could bring some serious adjustments to the development trends of the office real estate. Experts predict that, given the new realities of the office market, tenants will be looking to optimize expenses and possibly pull out of lease agreements. The experts at the CRE First roundtable discussed how both landlords and tenants can find a way out of such situations with minimal losses.
“Lease agreements clearly stipulate in which situations each of the parties has the opportunity to terminate the contract ahead of schedule. There must be substantiated grounds,” notes Alexander Ustinov.
At the same time, both sides should have balanced rights. “Today on the office real estate market the forecasting horizon is relatively short. However, the development scenario could be either negative or positive. In trying to insure themselves against negative scenarios, an increasing number of tenants are striving to include in lease agreements conditions allowing the possibility of early termination of the agreement. In turn, landlords can balance this out by including a condition allowing for revision (raising) of lease rates during the term of the agreement,” the expert says.