When It Comes to Your Lease: Seek Advice from an Expert with Local Knowledge

When It Comes to Your Lease: Seek Advice from an Expert with Local Knowledge

Most business owners are really good at what they do.

They are also usually great negotiators in their area of expertise.  But, perhaps strong negotiation skills in one’s business realm does not benefit negotiation when it comes to securing commercial real estate leases for their own businesses, including extensions and renewals.

Even if you’re just facing a simple lease renewal, there can be just as many available concessions and negotiation points as in the initial lease.

Hiring a tenant representation broker does not costs the tenant extra.   The current industry standard is for the landlord to pay all the brokerage fees for new lease acquisitions and renewals. In most cases, representation will not impact the cost of your lease.

Some of the main points to consider when negotiating a lease include:

    Termination options — These options provide flexibility to the tenant in the event that business space needs change during the term of the lease

Right of first refusal for expansion space — A different type of option in favor of the tenant, useful if there is potential for your space needs to increase during the term of your lease

    Concessions — These include financial incentives like moving allowances, tenant improvements, and rental abatement in order to entice quality tenants to lease their facilities

    Cap on operating expenses — Many commercial leases pass operating expenses on to the tenant; this generally cannot be avoided. Make sure to mitigate your exposure to excessive annual increases by negotiating a cap or ceiling to the tenant portion of any increase. Check with a local market expert to determine what is standard in your market

Even if you’re facing just a “simple” lease renewal, there can be just as many available concessions and negotiation points as in the initial lease. Renewing tenants are far more profitable to landlords than new ones. Understanding this will help leverage your renewal options.

Business owners may be able to find limited info on various Internet sites, but what they are seeing only represents a fraction of the intel. What about off-market availabilities, lease concessions, and soon-to-be available properties?

Working with a trusted real estate advisor can save your business more than just time and money. A good broker/advisor has a thorough understanding of current market concessions, comparable rates and other market indicators to aid in negotiating the best possible deal and will help protect your business from unnecessary risk allowing you sleep better at night.

When it comes time to find that advisor…..call us at Scheer Partners.

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