Renewing Your Lease? Consider This First
Need to Renew?
Renewing a lease can be a pretty overwhelming and complex situation for corporate tenants who are accustomed to simply doing their job and not worrying about real estate. While that’s tough, it’s also a way to learn what the current market is doing and how the current position of your business can determine whether you can negotiate better lease terms moving forward.
When you truly understand your options during a lease renewal negotiation, you can be a force to be reckoned with. A tenant representation broker will arm you with market knowledge that you may not otherwise be privy to, help you to negotiate a lower rate, acquire additional amenities, and secure the best deal possible for your business. Read on to find out more way you can ensure a good deal for your business as well as how you can protect your future commercial real estate ventures.
Negotiate Early…It Only Makes Sense
When considering a commercial real estate lease renewal, it is always best to be proactive. Evaluate your situation, determine what is and is not working for your business, and communicate with your landlord 9-12 months before your lease agreement expires. Your landlord will consider these points while reviewing your renewal and will be well aware that time is on your side – time for you to look for a new space if your concerns are not fairly considered.
In the event that you don’t have time, I’ve got you covered. What I just described is the best-case scenario, however, I have closed Class A office space deals within the span of a business week so I know it can be done. If you have a tenant representation broker who is “Johhny on the spot” and is as “quick as lightning”, then you’ve got a great teammate fighting for you. That kind of broker will alert the landlord upfront that “time is of the essence” and the deal needs to close fast. If the landlord is on board, you’ve got a great situation in front of you and even greater representation behind you.
What’s Going On With Your Current Space?
Before making any sudden decisions, take the time to analyze how your business is performing in its current commercial space. This is an opportunity to determine if the space is still suitable for your company and its future growth. Items to consider are location, amenities for employees, office configurations, and tech-enabled infrastructure. These can all serve as discussion points in the negotiation of your renewal. There is a possibility that your current landlord may incur these costs if it means keeping your company as a tenant. When you determine these factors, you can really increase your market knowledge which will facilitate an opportunity for you to have more leverage in negotiation.
Understand the Market Conditions
The commercial real estate market is dynamic, resulting in continuous changes year after year. It is important to be up-to-date on the current state of the market when looking to sign a new commercial lease or renew your current lease. Look at the market around you; are the rents similar to what you are currently paying for space? Are there other properties that offer additional benefits? Having this knowledge gives you the ability to be well informed while negotiating your current lease. If there is the potential to have some of these added benefits, lease renewal is the time to present them to your landlord.
Once you are more knowledgeable about the current market conditions, ask your tenant representative to negotiate an option or two for you. The market changes every year so it would best serve you to lock in a good rate for as long as you can. If it costs too many dollars for the same thing you had last year, it doesn’t make sense. Don’t you agree?
Research Alternative Options
Even if you are comfortable in your current commercial space, it is always beneficial to educate yourself on other buildings and owners in the market. You may determine an opportunity that is a better fit for your company. Availabilities, rental rates, and amenities have probably changed since you were last in the market, so it is worth the time to look at your options. During your research, you will become more knowledgeable about the commercial real estate market. Whether you stay in your current space or sign another commercial lease, this information can benefit your negotiation process.
Work with a Commercial Real Estate Broker to Negotiate
Do not underestimate the importance of using a broker to help you negotiate your commercial real estate lease renewals. In addition to sharing their market expertise, tenant representation brokers are always aware of the current market conditions, opportunities, owners, and other brokers. They provide you with leverage to get the incentives that you and your business deserve and have a genuine interest in seeing you win. Tenant reps know how important the right office space is for your business. An experienced broker can add value to your commercial lease renewal process, negotiate any required terms, and answer any lease related questions.
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