7 Tips For Renewing a Commercial Lease

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Every commercial lease comes to an end. This particular lease renewal period offers an opportunity for companies to check the current real estate market, determine their standing as a tenant, and renegotiate their lease for more favorable terms.

Secure a great deal on a space that could serve your business for years to come.  Here are tips and necessary knowledge on renewing a commercial lease.

1. Assess the state of the real estate market

The commercial real estate market won’t be the same as when you first signed your lease. Make sure you assess the current state of the market even if you plan on staying in your current space. This will give you insight into what’s on offer in other buildings.

You may find a space that offers better contract terms, more amenities, lower taxes, and more.

Even if you choose to stay after exploring the options available on the market, you can use desirable factors from other commercial spaces to negotiate a better lease for yourself.

2. Make sure you negotiate your lease as early as possible

Be proactive when it comes to renewing your commercial lease.

This includes reviewing your lease terms and contacting your landlord for negotiation months before the lease’s end date.

This is partly because the movement of the real estate market and economy may allow you to negotiate your lease early. Doing so months in advance offers advantages like flexibility, great opportunities for saving, and sufficient time to draft negotiation terms.

3. Most landlords prefer tenant continuity

A commercial lease renewal equals financial benefits for landlords. Landlords prefer to continue receiving rental income and not have to spend time and money upgrading the space or looking for a new tenant. A landlord will most likely be open to negotiation because of this.

Leveraging this information and understanding how much money relates to your landlord keeping you as a tenant, can help you negotiate a rental fee that benefits you.

4. Take your time on the initial offer

Responding too soon to the initial proposal sends the message that you don’t have many options. Take the time to think about the offer.

This creates the impression that you’re potentially evaluating other commercial spaces.

5. Use this as an opportunity to fix any issues that have affected you

If you have experienced any issues during your lease term, this is the ideal time to bring them up and get them fixed.

Improvements and upgrades of office space and common areas, as well as access to certain parts of the building are a part of the negotiation process.

6. Always factor in your future growth

Consider if this space will serve your business’ needs in the future. If you’ve already outgrown the space or soon will, it’s best to negotiate a clause that allows you to move into surrounding office space. Added to this, negotiating a sublet clause can help you sublet the premises to another party while you look for a different property that will meet all your requirements.

Here are 4 signs it’s time to expand your office space.

7. Consider hiring a commercial real estate broker for negotiation

Hiring a commercial real estate broker is ideal for lease renewal negotiations. Real estate brokers are well versed in commercial real estate market conditions, and can help you get a return on your investment by requesting lower rent, tenant improvement allowances, and more.

Moving from one building to another is timely and costly for businesses, which is why renewing a commercial lease is usually the first option for many. If your current space meets your business’ needs, you’ll likely enjoy using the tips above to negotiate a favorable lease renewal.

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