The Meter is Running
The Habitat Article Archive includes the full text of all of our
magazine articles dating back to 2002. You can view 3 articles per
month for free. (Repeat views of the same article don’t count
against your monthly limit.)
To read more, purchase a print subscription or a daily or yearly All-Access Pass
and get unlimited access to the Archive. Prices start at 1.95.
You've reached your free article limit for this month.
To read this article and gain unlimited access to the Habitat Article
Archive, which includes the full text of all our magazine articles
dating back to 2002, purchase an All-Access Pass.
Commercial leasing issues are affecting co-op and condo budgets. Options include using reserve funds, temporary assessments, and potential maintenance increases.
AUTHORAndrew Freedland, Partner, Herrick Feinstein
Vacancies up, rents down. Commercial leasing has been having issues for almost a decade. Years ago, many co-ops and condos relied on rental income to balance budgets, but rents today are not what they were many years ago. There are more vacancies, and buildings are having trouble bringing in quality tenants who are going to sign those five-, seven- and 10-year leases we used to see.
Three budget options. With a tighter rental market and lower rents, what are your options to create a balanced budget? In the short term you could tap into the reserve fund, using it as a float for a few months while you try to fill the vacant commercial space. But if you still haven’t found a tenant three, four, five months down the road, a temporary assessment is a reasonable next step. If you can’t find a tenant for an even longer term, it might be time to increase maintenance or common charges.
Case by case. The solution depends on the situation. You’ve got to balance the budget, so you’ve got to be realistic about how long you think the shortfall is going to last.