As you approach the end of your lease, you’ll have to decide whether to renew or begin looking for a new location. Many tenants sign whatever agreement their landlord places in front of them. We recommend you take time to develop and negotiate lease renewal strategies. You will end up with a more favorable lease renewal by following these tips:
Know your timeline
You should review your current lease to figure out when to approach your landlord. Landlords include a timeline to ensure adequate time to find another tenant should you decide to vacate.
We suggest you create a one-page lease summary with all important dates. This summary will help you know when to begin negotiating your lease renewal. If you wait too long, you may end up stuck with high rent rates because you didn’t have enough time to look for a new space.
Know your options
Even if you love your space, you should research current market rates and other space options. Identify your BATNA (best alternative to a negotiated agreement) should you decide not to renew and stick to it throughout the negotiation process. You create leverage in a renewal negotiation when you’re willing to relocate and have options readily available.
Understand your worth as a tenant
To understand your worth as a tenant, ask the following questions:
What percentage of the landlord’s property do I occupy?
How “leasable” is my space to another tenant?
What is my relationship with my landlord?
Put yourself in your landlord’s shoes to understand their viewpoint going into the renewal. Landlords often want to renew to avoid a vacancy. But they may also easily find a replacement tenant. In these instances, the landlord has strong negotiation power, which may result in fewer concessions for you.
Hire a commercial real estate broker
Many tenants forgo hiring a commercial real estate broker for lease renewals. As a result, they miss out on concessions such as lower rent rates, free rent and more generous tenant improvement allowances. Tenants often find hiring a broker provides a significant return on investment during a lease renewal. Brokers also provide support and expertise in your property search and negotiation.
Menlo Group would love to help you with your lease renewal strategies. Contact a member of our tenant representation team to take the first steps toward your renewal.