In the aftermath of the pandemic,
industrial lease negotiations entered uncharted territory. But unlike the Great
Recession, this period saw a surge—not a collapse—in rental rates, particularly in Class A logistics
warehouses throughout Southern California. Rents doubled, in some cases even
tripled, driven by soaring demand, constrained supply, and e-commerce
acceleration. That upward trajectory has since
leveled off, and we’re now seeing a return to more normalized leasing
conditions. However, rental rates have not yet subsided to pre-pandemic
levels. Many in the industry expect
downward pressure to continue throughout 2025, especially in markets with
rising vacancy and macroeconomic uncertainty. As this shift unfolds, landlords
and tenants alike are revisiting an old but effective strategy: the blend
and extend. For those unfamiliar, a blend
and extend is a lease modification that resets the rental rate—usually blending
the remaining term’s rate with a new, often lower rate—in exchange for an
extension of the lease term. It’s a win-win, in theory: tenants secure
near-term relief, and landlords gain longer-term income stability. During the early 2010s, this
strategy was a go-to for owners and occupants after the Great Recession. But in
recent years, it fell out of favor as rising market rents and tight industrial
vacancy rates made lease concessions less necessary. Now, with shifting market
dynamics—especially here in Southern California—the blend and extend may be
poised for a comeback. Here’s what makes this moment
unique: •Tariff uncertainty is rattling supply chains. Many importers and
logistics companies operating near the ports of Los Angeles and Long Beach are
reevaluating their long-term space needs in the face of potential cost
increases. Locking in a lower rent through a blend-and-extend gives them
breathing room while global trade policies shake out. •Tenants are more cost-conscious than ever, and many are considering
downsizing or relocating. A landlord who offers a reasonable blend-and-extend
may retain a tenant who otherwise might leave. •Landlords face longer lease-up times, particularly in softening
sectors like class A logistics space. Extending a current tenant—even at a
major discount—may be preferable to enduring months of vacancy. •Lenders like stability. A longer lease term improves the property’s
valuation and supports refinancing conversations. However, not all spaces or
situations qualify. Blend and extends work best when: •The tenant is stable and has a solid track record of payment. •The current rent is above market or nearing expiration. •The landlord wants to avoid the risk (and cost) of vacancy and
re-tenanting. Owners and occupants alike should
revisit lease portfolios and look for opportunities where both sides might
benefit. In 2025, creativity and collaboration will again be the keys to
unlocking deals—and the blend and extend might just be the versatile tool
needed.
Every April, like clockwork, golf fans across the
globe tune in to The Masters. From the blooming azaleas to the hushed reverence
of Augusta National, it’s a tournament steeped in tradition and excellence. But
beyond the pageantry and prestige lies a masterclass in preparation, strategy,
and mental fortitude—qualities that resonate far beyond the fairway.
As I watched the
tournament unfold this year, I was struck by how many parallels exist between
The Masters and the world of commercial real estate. Whether you’re chasing
birdies or escrows, there are lessons to be learned.
1. Preparation Wins
Tournaments—and Deals The grounds at
Augusta are groomed with year-round precision for one magical week in April.
Nothing is left to chance. In commercial real estate, preparation is no less
important. Before a property ever hits the market or a buyer steps onto a site,
there’s a mountain of research, underwriting, and planning that must be done.
Deals go sideways when we cut corners—successful ones are built on the bedrock
of preparation.
2. Strategy Over
Strength Sure, power off the
tee is exciting. But it’s how a golfer manages the course—choosing shots
wisely, knowing when to lay up, and navigating hazards—that determines the
scorecard. The same is true in our business. Chasing every deal, every lead,
and every shiny object is a recipe for burnout. Smart brokers know how to
assess risk and reward, focus on the opportunities with the greatest potential,
and let go of the ones that don’t fit.
3. The Short Game
Seals the Win Drives might get the
crowd roaring, but tournaments are won with putts and chips. In commercial real
estate, our short game shows up in the details: lease language, escrow
instructions, title exceptions, and timelines. Deals don’t fall apart over
asking price—they fall apart because of overlooked details and poor
follow-through. Mastering the short game means fewer surprises and smoother
closings.
4. It’s All in Your
Head Golf is as much
mental as it is physical. Just ask any pro who’s blown a Sunday lead. The same
goes for us. When a buyer backs out, a building fails inspection, or a deal
dies in committee, we have two choices: spiral or steady ourselves. Longevity
in this business favors those who stay calm, adapt, and keep moving.
5. Legacy Matters At Augusta, legacy is
everything. Champions are immortalized, and respect for the game runs deep. In
commercial real estate, our reputation is our calling card. Over time, how we
treat clients, competitors, and colleagues becomes part of our own professional
legacy. It’s not about one big win—it’s about consistency, character, and how
you play the long game.
So while most of us
won’t slip on a green jacket anytime soon, we can still learn from those who
do. The Masters reminds us that excellence is never accidental. It’s
earned—through discipline, patience, and the relentless pursuit of better. In
golf, in real estate, and in life.
Our
aging vehicles finally cried “uncle.” And as someone with Scottish roots and a
frugal mindset, I’ve always approached car buying with a specific formula: find
a certified used vehicle, pay cash, and drive it until the wheels practically
fall off. That method has served us well over the years with a low
cost-per-mile—but lately, the repair bills started stacking up. It was time for
a change. What
followed was a multi-week odyssey of AutoTrader scrolling, dealership visits,
and spirited discussions with my wife over the best powertrain option—gas,
hybrid, or electric. Due to a shortage of the car I originally wanted, we found
ourselves walking into a Tesla showroom. Fast
forward to today: we are officially Tesla owners. And while I could fill a
separate column with thoughts about the vehicle itself, I was struck by how
much the Tesla
experience
mirrors trends—and opportunities—within commercial real estate. Let me explain: 1.
The Search Mirrors Site Selection Car
shopping is not unlike the process tenants and buyers go through when sourcing
new locations. There’s a checklist of needs, emotional and financial
considerations, and ultimately, the choice that best aligns with priorities.
The more intuitive and guided that search is, the better the experience. 2.
Tesla Has Reimagined the Buying Process Gone
are the cubicles, the “let me talk to my manager” routines, and the hours-long
negotiations. Tesla has engineered a customer journey that’s seamless—from the
online order to the app-based updates to the five-minute pickup process. What
if commercial real estate transactions were just as frictionless? 3.
CRE Meets EV: Repurposed Real Estate Many
Tesla delivery centers and showrooms are in repurposed buildings—former big-box
stores, warehouses, or auto dealerships. These adaptive reuses demonstrate that
outdated space can be reimagined in bold, relevant ways. This is a huge lesson
for property owners with obsolete inventory. 4.
Tech as a Differentiator From
the test drive to the paperwork, everything is tech-forward. Not just modern—elevated.
In CRE, we’re seeing the same trend: clients expect more digital tools, faster
response times, and transparency. Firms that embrace smart tech—not just as a
bolt-on, but as part of the DNA—will win. The
future of commercial real estate isn’t just about location—it’s about
experience, adaptability, and efficiency. Just like Tesla rethought how we buy
cars, maybe it’s time we rethought how we lease, sell, and manage properties. Allen C. Buchanan,
SIOR, is a principal with Lee
& Associates Commercial Real Estate Services in Orange. He can be reached
at abuchanan@lee-associates.com or 714.564.7104. His website
is allencbuchanan.blogspot.com.
