Most tenants who lease commercial space think that renewing the lease is an easy process that does not require any additional work. Well we’re here to tell you if done right and you want to get the best deal possible, renewing a commercial lease takes time and effort.
Even if you don’t want to move and even if you are just exercising your option to renew and extend, commercial lease renewals have the same economic impact as signing a new lease elsewhere and relocating your business. Below we will share some common misconceptions about the commercial lease renewal process. Let’s go ahead and get started!
The Landlord Will Take Care of Me
Many tenants assume that because they have paid rent on time and been a great long-term tenant that never complains that the landlord is automatically going to give them the best deal. This is not true.
Simply stated: landlords buy and lease commercial real estate properties to make money. You are either negotiating with the owner or an owner’s representative that is an expert in market conditions and is ultimately trying to get the highest rents they can, and keep their expenses as low as possible. Their experience, knowledge, and resources are greater than yours which means they have the upper hand in commercial lease negotiations.
I Have to Take My Renewal Option That is Already Negotiated
You may have a renewal option with pre-negotiated lease rates however that does not mean you have to take it.
To protect yourself, you want to start your lease renewal negotiations well before your renewal option expires. This will give you more time to try and negotiate a better deal with the landlord, and if you can’t you can take the pre-negotiated option or relocate to a better location.
Moving is Expensive So I Have to Take My Renewal Option
Relocating your company is expensive and can be disruptive however, paying too much for your renewal space can be worse. A new landlord might offer you a lower lease rate and give you significant tenant improvement dollars while your renewal option might not be that great. The only way to find this out is to take time to research the market and compare your options.
I Can Handle My Commercial Lease Renewal Myself
If you have an option, it has a fixed rent and terms and requires no negotiation, and you’re sure that it’s the best deal possible, you might be able to do your own commercial lease renewal. Most of the time, this isn’t the case. In those situations, getting help from an experienced commercial real estate broker that specializes in tenant representation will help to ensure that you get the best deal possible.
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