If you renew your lease earlier, you can have the satisfaction of having office space for the future. This can save you money if market prices go up, can lead you to get a larger tenant improvement allowance, and may even be the right solution for an expansion if you`ve planned one. However, it`s not for everyone. Businesses that have higher than market rental prices, are growing at a rate their landlord can`t accommodate, or don`t see their current office as a long-term home shouldn`t consider renewing their lease sooner. In the real estate market, you sometimes hear the terms subletting and subletting in relation to a particular type of lease. Taking into account the use of the sublease versus the sublease,. Read More When a good tenant asks to renew their lease, it offers many benefits to landlords. Most lease extensions are subject to the Landlords and Tenants Act of 1954, and the rules can be complicated and confusing. However, if your commercial lease needs to be renewed, you want to make sure you get the most favorable terms for your business. In this article, we`ll look at the most important elements that need to be negotiated when renewing a commercial lease to help you understand what terms you might be able to change. Create competition for your rental.

Commercial tenants should negotiate in multiple locations at the same time – especially for lease extensions, even if they don`t want to move. Create options and play one owner against another. Let each owner know that you will receive further suggestions. This often leads to a bidding war between owners, where you end up winning. To have time to go through the market research process and negotiate your new lease, typical renewal schedules follow this general schedule: market changes. If there are changes in your market that could weaken your landlord`s position, you can also use it to negotiate a longer and cheaper lease. Changes such as new competing developments, an increase in vacancy rates, or a drop in space rents could cause your landlord to hold you back longer. Most landlords push for a rent increase when they extend a tenant`s lease. This is normal and something you should expect. There can be a lot going on during a 5- or 10-year lease between the time you move in and the time you need to negotiate a lease extension.

Negotiating a lease extension is not an overnight process. This can take some time and involves a number of steps, as outlined in our book and summary below. The lease renewal period offers businesses the opportunity to assess their current position as tenants, rethink the commercial real estate market, and use this information to negotiate a better lease. At first, it can mean different things to different tenants. As a general rule, large tenants should start the renewal process earlier than small tenants. To help you decide what the right time is for your business, we`ve put together this list of three reasons to renew your lease sooner (and three reasons not to). Your commercial lease is coming to an end, and you are facing a big decision here. Am I renewing my lease or is it time to move on? This is a rather busy issue given the impact of both decisions. Moving can be a very big pain (and quite expensive too), but staying in place may not be the best decision for your business either! The only way to make an informed decision is to weigh everyone`s pros and cons and dig deep to get clarification on which choice offers the most benefits. Here are some factors to consider: If you`ve never shortened your lease, it`s wise to do so before extending the commercial lease. Even if you did, it`s a good idea to do it again.

The reason for this is that it is common for companies to forget some of their provisions in their lease over time. Something that was acceptable to you might not be acceptable seven years later. When you make a summary, force yourself to sit down and carefully re-read the document so that you know exactly what you are going to renew. By renewing early, you may be able to negotiate an IT allocation, which will give you more opportunities to renovate and upgrade your office space to better fit your business without worrying about cost. The answers to these questions can help you make the right decision about an extension or move and give you information that will prove valuable during lease renewal negotiations if you choose to stay. A property management company may charge you (the landlord) a lease renewal fee if a current tenant decides to renew their lease for your property. Your property management company may charge you a flat fee per unit or a percentage of one month`s rent if your tenant renews their lease. Of course, it can also work the other way around. If your business is shrinking and the landlord doesn`t now allow you to determine the right size, extending the existing lease for the largest office space would be a mistake. Instead, it probably makes more sense to sublet the excess space and renew it to a smaller size during the renewal period, or cancel your lease and move to a location that better suits your needs. However, if the property has been vacant for too long, you should consider self-promotion.

This is not the ideal situation as you have to fill your manager`s job, but it will help you minimize the vacancy! Especially since the vacancy can limit your income. Just like initial lease negotiations, renewals are usually a lengthy process. You should consider the proposal you receive from the owner as a starting point for discussions and be prepared to counter it. Depending on your size, an early extension may mean an acceleration of the above deadlines from 3 to 6 months, but in some cases it may mean an acceleration of the schedule by several years. If you`re renewing and negotiating your commercial lease, it`s important to seek the help of a tenant broker to explore your renewal options, otherwise you`ll likely put yourself at a serious disadvantage. Here`s why: You only have to pay a lease renewal fee (and rental fee in general) if you hire a property management company. While working with a management company takes some of the hassle out of renting your property, you can find tools that greatly simplify the process so you can feel confident in running your business yourself. For example, you can post rental quotes and collect rent online and make things easier for you and your tenants. .