8 Tips When Negotiating Your Commercial Lease Renewal

8 Tips When Negotiating Your Commercial Lease Renewal

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According to the leading market analysts, most business owners simply sign the contracts handed over to them by their landlords without even realizing that the leases are open for negotiation. However, the loss incurred by a poor negotiation on the part of the entrepreneur is much higher than accepting the lease on its face value.  Also, businesses that altogether steer away from a lease and choose to rent the space on a monthly basis not only end up paying more but, may need to vacate the property in such a short notice that they eventually lose the value of the renovations implemented during their stay.  

This clearly implies two things; firstly, subscribing to a lease is of the utmost importance to protect your business and regenerate returns from your investment in the asset and secondly, being familiar with the right methods of negotiating your commercial lease is essential. In the following section, we will serve you with 8 tips to gain access to the most profitable lease for your company.

“Being familiar with the right methods of negotiating your commercial lease is essential.”

  • Start While There’s Enough Time

Don’t rush things when it comes to renewing your commercial lease; start while there’s still time to ensure that you are served with greater clarity and protection for your business. Additionally, negotiations for commercial leases can be stretched over a long period and therefore, if you do not roll out the petitions early, you will have to possibly cut your negotiations short and settle for less than you deserve.

  • Set Your Priorities Right

More than anything else, you must have enough transparency regarding the immediate requirements of your business and the ways to comply with them. Hence, when you try to initiate a commercial lease negotiation, try to identify the points that will assist you in catalyzing them to ensue gains for your business. Outline a clear picture of your business’s present and future space needs and seek tenant representation to create an estimation of the budget.  For instance, if you are not sure whether or not your company will thrive in this very location for the coming years, then pay per square foot for a shorter lease to terminate the contract any moment you please.

  • Create a Budget

Create a rigid budget prior to your lease negotiations to confirm that you are not risking the hard-earned funds of your business. Thoroughly analyze all the aspects that the rent will cover to avoid paying for attributes that have not been used and remove the discrepancies of hidden costs that are capable of breaking your bank in the future.  Probe into the specifications of the incidentals before the lease renewal and do not shy away from asking your landlord to introduce a few changes in the clauses that will, in due course, prove beneficial to your business.

  • Check Market Rates

You can always rely on our tenant representation team in Albany, New York to generate a copy comprising of the lease rents that are presently prevailing in the market. With this information and a tenant representation team at hand, you will have a clear insight into the trending scenario and an opening to consider the alternatives from the neighborhood for your business.  Next, weigh them against the rate proposed by your landlord so that the lease can be successfully negotiated for a lower rate with solid and reliable justifications supporting your pitch.

  • Forget About the Base Rent

Under no circumstances do the landlords expect their tenants to settle for the figure that they have related as the base rent. In fact, if capitalized on mindfully, the base rent put forward in the initial contract of the lease can be the starting point of the negotiation from where the rates can only dip in your offer.

  • Alter Some of the Clauses to Protect Your Interests

Clauses that are concerned with subleasing and assignment and co-tenancy will inevitably safeguard the interests of your business in the long run.  If you are certain that you want your business to grow here for the next 5-7 years at least then, including these clauses along with tenant representation in your contract would be a wise resort.

  • Go Through the Termination Conditions Once More

Review the termination conditions before signing the contract; meaning, look for the circumstances that will open doors to the cancellation of the lease and you will be asked to clear the space. Questions like what happens if the building is sold or what are the repercussions of missing out on rent payment should be addressed beforehand.  Furthermore, ask the landlord if you can break the lease at a sudden point and if so, what would be the payment options to save yourself from being struck by a bolt from the blue when your business is already hitting the rock.

  • Keep Your Options Open

Always keep your options wide open to ensure that even if one deal that you had your heart set on fails, few other similar choices will bring you back to the track and save a chunk of your precious time.


About Denise Sherman, Tenant Consultant

Denise Sherman served in the Army as a Logistics Officer and now serves her community as a REALTOR® with Carrow Real Estate Services.  She combines her love for the industry with her passion for helping businesses grow.  Her team enjoys the role of Commercial Space Consultants because they get the opportunity to assist new and experienced business owners locate a home for their business and make good real estate decisions.   They will develop a workplace strategy to understand the company’s mission and business objectives as well as recognizing what is needed to best support their employees.   We look forward to serving your businesses as well.


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