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Four Commercial Lease Renewal Tips for Corporate Tenants

Renew your commercial lease

Renew your commercial leaseWhen you near the end of your commercial lease, you may consider renewing and staying in the space. Lease renewals give you a chance to evaluate your current business position as a tenant, examine the current commercial real estate market, and negotiate a better lease agreement.

Here are four tips to help you negotiate the best possible commercial lease renewal.

  1. Start negotiating early

You should be familiar with your lease agreement and the parameters of your lease renewal. Proactivity can benefit you during the renewal process, so start negotiating early. If you procrastinate, you may end up stuck in your space with high rent rates because you didn’t have enough time to look for a new location.

  1. Evaluate the real estate market

Learn about the current conditions of the real estate market by searching online and talking to other tenants. You may find another space that is competitive and worth exploring. You create leverage during the negotiation process when you’re willing to relocate and have options readily available. Here are some specific elements of the market to explore:

What are current rent rates?

Find out how your rent compares to the rates of similar properties in the area. If other locations have lower rates, you can use that as a bargaining chip to lower your rate.

What are current vacancy rates?

If the market has high vacancy rates, it means you have options. Your landlord is now at risk of having tenants walk away and will be more likely to make concessions to get you to stay.

What similar commercial properties are under construction?

New or renovated properties are attractive to tenants. Your landlord will be aware of these better options and will likely agree to your terms to get you to stay.

  1. Consider your future growth

As you approach your renewal, you should take a look at your business plan and projections for future growth. You don’t want to be stuck in a space you will quickly outgrow. Consider adding a clause to expand into adjacent suites when your business grows. You may also want to negotiate for a sublet clause, which enables you to transfer interest in the premises while you find a larger location. Another option would be to negotiate a shorter lease with the right to extend. If business doesn’t take off like you anticipated, you will have the option to stay.

  1. 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 many concessions such as lower rent rates, free rent and generous tenant improvement allowances. These experts are familiar with market conditions, current landlord concessions and the negotiation process. We’re confident you will see a return on investment from your decision to hire a commercial real estate broker.

Coming up on the end of your lease? Contact a member of our tenant and buyer representation team to get started on your renewal.

7 Comments

  1. Gretchen says:

    This is really helpful, thanks.

  2. Vanessa Blair says:

    My brother wants to have a long lease on a real estate property near his office. It was explained here that it will be best to start negotiating as early as possible to have a good deal. Furthermore, it’s recommended to consult real estate experts when looking for commercial real estates for lease.

  3. Eugenia says:

    Thank you for the terrific article

  4. Dollie says:

    Thank you for sharing your info. I really appreciate your efforts and I will be waiting for your further write ups. Thanks once again.

  5. London says:

    Thanks for the blog. Fantastic.

  6. Lindsey says:

    Good site you have here.. It’s hard to find quality
    writing like yours nowadays. I really appreciate people
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  7. Rodolfo says:

    Great post.

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