Dissatisfied with your current lease? Many commercial tenants fail to realize that they can attempt to renegotiate their leases if the conditions prove to be undesirable or if the market changes over the course of the lease. Although there is no guarantee that you can get your landlord to accept your proposed terms, renegotiating successfully could positively impact your bottom line.
Following these tips will help to improve your chances of walking away from the table with a better deal.
Know What to Ask For
Make sure that you head to the negotiation table with a specific goal in mind. Common requests during renegotiations include new rental rates, more generous tenant improvement packages, fee adjustments and new base years for CAM calculations. Some landlords will even be willing to provide a few months of free rent. Before you meet, think about what you would ideally like to get out of the renegotiation and then consider asking for something beyond that so you have room to be flexible.
Walk in With Data
Before you head to the negotiation table, do your homework. Find out what the general trends are in the market and bring data along with you to your meeting. If you can show that your rent is well above what other tenants in the area or paying, your landlord will be more compelled to take your request seriously.
Be Prepared to Extend Your Lease
Negotiations are all about give and take. You can't expect your landlord to honor your request without getting something in return. One thing that you can offer that will be of value to the landlord is the length of your lease. Before your meeting, think about the longest period of time that you can commit to with a renegotiated lease. Of course, you don't want to lock yourself further into future than you're comfortable with, even if it means getting a lower rate.
Have a Backup Plan
Don't assume that your landlord is going to find your request perfectly reasonable and be willing to renegotiate to the terms that you propose. Make sure that you are ready to begin searching for new commercial real estate if you are unable to reach a deal and end up having to move. You don't want to be so optimistic that you will get what you want that you fail to plan what you'll do if your landlord won't meet you halfway.
If your lease will be up in the next few months, start the renegotiation process soon. Although the negotiation itself may not be lengthy, finding new space to rent if you are unable to reach an agreement will be a time-consuming process. Leave yourself enough time to take action, or you may end up having to renew your less-than-favorable lease anyway.
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