If your space is working well for your company, renewing your lease often makes sense by sparing you the time and financial costs of a move. To ensure that you get the best possible deal during your commercial lease renewal, follow these tips:
1. Have a Pro On Your Team
Tenant rep brokers aren't just for initial leases. A rep can simplify every step of the renewal process by acting as an advisor and an advocate. The tenant rep's fees are paid for by the landlord, so benefiting from their expertise doesn't mean incurring extra costs. Make sure to secure a rep at the very start of the renewal process. It's important to allow the rep to participate in all contact and meetings with your landlord.
2. Start As Early as You Can
It's not uncommon for commercial lease renewals to go through more than one round of negotiation before both parties come to an agreement on terms. Starting early helps to ensure that you have enough time to complete negotiations and aren't rushed to make a decision due to the clock.
3. Skip Exercising the Renewal Clause
If your lease has a renewal clause, you can rely on it as a safety net to ensure that you won't have to vacate your space; however, the terms outlined in the clause typically favor the landlord heavily. It's almost always better to renegotiate new terms than to just exercise your right to renew right from the start.
4. Go Long Term With Flexibility When Possible
Offering a long term for your lease renewal will often make landlords more willing to make concessions during the negotiation process. If a long-term lease will work for your company, go that route, but be sure to have language added to the agreement to give you some flexibility. Examples include the right to sublet and assign and an early termination clause.
5. Revisit the Market
A lot can change in the commercial real estate market in just a few years, and that's particularly true in the post-COVID-19 era. Before you head to the negotiation table, familiarize yourself with current market trends. Have occupancies increased or decreased? What are the current average rent rates? Has the class of your building changed? Are there any new in-demand buildings in your geographic area?
6. Check Out the Competition
Even if you're completely sure that you want to remain where you are, take a look at other offices that might meet your needs. Introducing competition to the renewal negotiation process can give you leverage. Plus, if you're not able to reach an agreement with your landlord, you'll have a Plan B already in progress.
7. Make a Wish List
Before you begin negotiating, sit down with your management team and compile a prioritized wish list of things you would like to change about your space. You may be able to renegotiate clauses related to parking and signage or to get your landlord to agree to tenant improvements at the bargaining table.
Here are a few other articles you might enjoy:
5 Ways to Make a Greener Office Space
8 Terms to Look for in Your Next Lease
Corporate Tenants & Repairs: Who's Responsible?
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