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3 Quick Tips To Negotiating Your Next Lease

3 Quick Tips On Negotiating Your Next Lease

Prepare for the…expected

 

No, that byline is not typo. We always hear the phrase “expect the unexpected”, but how many of us properly prepare for the expected?

If we prepare for what we can expect and control, we can effectively allocate resources to those unexpected things that always seem to pop-up in life.

To make things easier, I’ve gathered a few expected situations or steps you can take that will help you when it’s time to negotiate a new lease. So let’s dive in.


Person thinking about their lease negotiations

Tip #1 Evaluate Your Current Space From A Landlord’s Perspective

Being in your space day to day, it can be easy to overlook what kind of benefits and drawbacks your space offers, and how the market has changed since you initially occupied the space. Some important factors to keep in mind:

  • Are there many other tenants actively looking for this size space?
  • Would the landlord need to spend money on capital improvements to attract another tenant?
  • Has vacancy in the area crept up? Are there less cars in the parking lot than there used to be?

Having a better idea of how desirable or undesirable your space is to other tenants will let you know how much leverage you have during negotiations. Your landlord wants to keep the building full and may be willing to offer a more aggressive lease proposal to keep you in a space they would otherwise have trouble filling.


Lease Document On Table

Tip #2 Review Your Current Lease (And The Circumstances Around It)

Hopefully this is something you already do from time-to-time, but if you haven’t reviewed the terms of your lease in a while, you should.

Besides lease terms, you should also consider the circumstances around when you signed the lease. Here are some things to review

  • Have your annual increases lagged or outpaced rental rate growth for this market?
  • Were there tenant improvement allowances amortized into your lease rate?
  • Do you have renewal options? If so, when do you need to give notice and how is the rental rate determined?
  • Were there any global pandemics happening when you last renewed with your landlord? Now that there is less uncertainty in the market, landlords are less willing to offer short term renewals.

Surveying Comparable Leases On Market

Tip #3 Survey Comparable Lease Spaces On The Market

Doing some market research around your desired locations and seeing other available spaces will give you an idea what other viable options your company has besides your current space.

You can then weigh these options to decide whether your current space still aligns with your business’ goals, or if it’s time for a fresh start in a new building. A few things to keep in mind:

  • Information on online listing sites can be outdated. You may be seeing spaces listed which were leased months ago with “estimated rents” that can vary wildly from true market rental rates.
  • It’s impossible to truly compare costs via lease rates alone. Different buildings may include or exclude utilities, janitorial services, and tenant improvement allowances from their listed rates.
  • Before making plans to tour spaces, consider hiring a tenant representation broker to represent you in the process. This broker will handle the process of coordinating tours, gathering proposals from landlords, and breaking those proposals down so you can truly make an apples to apples comparison between different buildings.

In Conclusion

After considering these expected situations you might have uncovered some useful information that can impact your current negotiation or could motivate you to find a new space for your business.

If you want to discuss these tips, how these tips can help you, or you do have some unexpected situations that you need solutions for, give me a call.


 

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