Negotiating Your Lease Renewal

Negotiate your lease renewal

A renewal clause in a commercial real estate lease allows a tenant to decide whether or not to extend the lease once the initial lease term expires.

Unless you have truly experienced internal real estate resources with an ardent understanding of lease transactions and structure, along with access to timely local market information, you need to hire a commercial real estate professional that specializes in your product type: retail shopping centers, office buildings, or industrial warehouses.

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IMPORTANT QUESTIONS:

  1. Am I happy with my space?
  2. Has this site contributed toward my success?
  3. WHEN is my lease coming due? Do I have a “Notice Date”?
  4. Does my space need improvements?
  5. How does my rent compare to the surrounding market?
  6. How has the market changed since I signed my lease?
  7. What have I learned over the last 5 years about my lease?
  8. How much will it cost if I relocate my business?

Now is a great time to call a tenant representative to assist:

  • Your renewal is a NEGOTIABLE event.
  • Commercial tenant representatives understand favorable lease clauses.
  • The Landlord is counting on the fact you won’t exercise your option in time, you won’t relocate your business, and you won’t negotiate the renewal terms and conditions.
  • Commercial tenant representatives can help you make fully informed decisions if you are considering relocation. A successful relocation can lower costs, increase sales, and provide long term success.

It’s never too early to start negotiating your renewal

You have advantages to gain by starting early to become fully educated on the market conditions including soliciting proposals from other buildings. This process can take several months to complete especially if your Landlord is not educated and needs time to verify market data for rates, vacancy and rental concessions often discussed in the renewal negotiations.

ADDITIONAL QUESTIONS:

  1. What is a NOTICE DATE?
    Most leases contain a “Notice Date” requiring you to provide written notice to the Landlord that you are exercising your right to renew the lease. Emailing your intentions to your Landlord is not acceptable; you must send in writing.
  2. What if I missed my Notice Date? You may LOSE this right and you are in a very weak negotiating position. Open and friendly communication is the key.
  3. Where can I get HELP? You may have to pay a fee to your Tenant representative, but the savings will be worth it. A commercial real estate professional will prepare a competitive offer with fair and balanced lease clauses. Your lease is a monetary liability for you and your business, depending upon the size of your space; this can range from $300,000 up to over $1 Million. A good tenant representative helps you focus on your business, while communicating with the Landlord to avoid headaches, potential costly mistakes, providing the ability to lower your occupancy costs.
  4. Will the Landlord pay a commission to my Tenant Representative? There is a chance the Landlord will pay this fee, but not without strong open communication with integrity. Honesty really is the best policy. Build your case early to use the negotiating time to generate favorable terms and conditions.

SUMMARY:

  • Landlords don’t want vacancies.
  • Commercial rental rates are at historical lows.
  • Negotiate from strength by utilizing your tenant representative and starting the process early.
  • When market conditions improve, and they most certainly will, you’ll be glad you made the investment today.

For More Information Contact:

Bradley T. Balbo, Senior Vice President
602.778.3831
bradb@srgaz.com

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