Not all the blame for miscalculations, though, rests with landlords and their rulers. What's important, says Creamer, is to examine total occupational costs by dividing rent into square footage. In negotiations for corporate clients, Creamer says his tactic is to drive down the square footage, and therefore the rental charge. It's easy to say 'why bother' about a one dollar reduction. Of course, rent isn't the only thing a corporate tenant must consider when negotiating with a landlord or management agency.
Creamer notes that management charges and service fees and taxes vary wildly across the region.
In Hong Kong, while rent free concessions of up to 24 months are possible, service charges for air conditioning are not included. In Singapore, rent free periods may be shorter, but service charges are included and property taxes are nil. That can be difficult, particularly if a company operates in several markets. Not surprisingly, such regulations mean corporate tenants often end up forking over more money to landlords than what they had budgeted. Conversely, CFOs need to factor in concessions from landlords when assessing the true costs of renting.