Market What?

One key feature of the tenant advisory platform my partners and I created, TenantSee, is the Market Diagnostic.  What is it?  In short, it’s an output we provide our clients, at no cost (it’s part of our advisory platform), which draws from a spectrum of subject matter experts within C&W to develop a narrative regarding leverage in a specific asset, in a specific market.  It incorporates knowledge from our capital market and debt teams to understand an owner’s debt and equity positions.  We engage our asset teams to identify operational variables relating to the asset.  We leverage our research group for data regarding lease roll (Landlord exposure) and completed transactions in the asset and the comparable market.  We study the owner’s motivation profile.  In total, we develop a comprehensive market leverage narrative for our client that is sensitive to the asset, the market and timing.  Included in our deliverable is an indifference analysis, in which we clarify the value of a heavily discounted in-place lease extension vs. a “market” lease value (what a 3rd party tenant would be willing to pay for the space) in order to show the value at which the owner is otherwise indifferent whether our client renews or vacates.  This is vital information as we think about the economics of the existing building.  We also assess our client’s comparative cost of staying vs. relocating to several comparable buildings, including year one capital spend.  In totality, this gives our client great market insight, months before it needs to engage in a market process.  In other words, the Market Diagnostic is a resource we provide to help the client begin thinking (correctly) about a market, given the variety of market-based drivers impacting outcome. 
 
Of course, the most critical drivers are those defining the client’s need for space.  And we know those drivers don’t necessarily synch with lease timing.  This is why we typically begin providing Market Diagnostics 3 years prior to lease expiration, with updates every 6 months thereafter.  Not surprisingly, we often discover there is a sweet spot between market and client dynamic that calls for beneficial action ahead of an expiring lease. 
 
Providing a Market Diagnostic is the single easiest way for us to demonstrate how we think about tenant advisory.  We often do so on a complimentary basis, in order to explore our potential fit with prospective clients.  Regardless of the outcome, the Market Diagnostic provides a trove of valuable insights.  If you’d like to learn more, or maybe have us assess a market for your company, please reach out.