If your commercial lease is nearing the end of its term, you may be tempted to simply renew for the same terms and continue on with business as usual, but doing so can be a big mistake. To get the best deal for your company, it's important that you approach renewals as seriously as you do initial leases. Following these tips will help to ensure that you get the best outcome from the renewal process:
1. Start as Soon as You Can
Even if you're fairly positive you want to remain in your space, taking action on your lease renewal early will help to ensure that you don't have to rush the process. Negotiations with your landlord are an expected part of a renewal, and you'll have due diligence to complete before you head to the table. If at all possible, start the renewal process 18 months before the end of your lease to give you and your team as much time as possible.
2. Don't Just Opt for Your Option
A renewal option gives you a guarantee you'll be able to remain in your space if you wish; however, you should view that clause as a safety net rather than your main course of action. Negotiating with your landlord can help you score tenant improvements, a rent abatement and other concessions that you won't be able to take advantage of if you simply exercise your renewal option.
3. Get Reacquainted With the Market
A lot can change in the commercial real estate market over the course of a lease, particularly if you have a long-term contract. Taking the time to familiarize yourself with the current market conditions can help you negotiate more effectively. You'll want to know what the average rent rate in the area is and how that compares to what you're currently paying. Knowing how many similar offices to yours are vacant is also beneficial. If vacancies are rampant, your landlord is more likely to be flexible to keep you where you are.
4. Give Your Space a Grade
Thoroughly evaluate your current office before you approach your landlord about renewals. Is there a lot of unused space in the office? Do employees have enough room to work comfortably? Is the location proving to be an asset or a liability for your business? Is the existing floor plan working for you, or would you benefit from a remodel? Asking your leadership team for input can help to ensure you don't overlook a major flaw in your existing office.
5. Enlist the Help of a Pro
Tenant representative brokers aren't just for new leases. Having one by your side during the renewal process can save you time and increase your chances of getting the best possible deal. A broker can assist with every step of the renewal process from analyzing your existing space to evaluating the market. A tenant rep can also make you aware of any spaces in your area that may be better for your needs than your existing office.
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