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Renew the tenant or re-let the floors? An office lease decision
The prompt
Mainbrook Offices (a fictional owner in Frankfurt) has a tenant on 10,000 square metres whose lease ends this year. Option A: renew for 5 years at EUR 400 per square metre a year, with 6 months rent free. Option B: let the tenant go, refurbish for EUR 2 million, and re-let after 12 months empty at EUR 450, with 9 months rent free on a 4-year lease. While empty, the owner pays EUR 50 per square metre in service charges and taxes. Over the same 5 years, which option brings in more?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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