Home > Leasing, Uncategorized > 10 Lease Renewal Reminders

10 Lease Renewal Reminders

 

1.   The most important consideration any tenant may do is to hire a tenant representation broker, especially when relocation is an option.  Working for both landlords and tenants, I can say for certain that having a tenant broker can provide a tremendous advantage during a renewal negotiation. Just by placing a tenant broker on your team can increase the leverage in your lease negotiation. In the Greater Houston market, it is traditional for the landlord to pay your commercial broker’s fees, so it is imperative to be informed about the commercial real estate marketplace through brokerage representation.

2.   Second – begin early.  You do not want to subject your company to a position where it is down to the wire and the terms will not be favorable. Most tenants neglect this point and end up signing a poor deal only because they were not familiar with the process and had no time to negotiate a better transaction. “Early” can even mean over nine months or greater in advance of the lease termination, especially for those spaces that are large, and whose lease documents were written previously in a complex manner.

3.   On that note, review other options.  Even if you are not considering other space, you should always keep your eye on other space.   Have a number two and three pick for that “just in case” scenario. Performing proper due-diligence to see what the competition is offering for incentives is our job as tenant representatives. And, you will be surprised at what we can uncover. The simple fact that you have options lets your landlord know that you have alternatives.

4.   Negotiations do not take place casually in your office or at showings. Even the largest companies make this mistake.  Stop talking and start listening for negotiable items.  So often, emotions and ego enter into negotiations and they will typically lead you to nowhere.  Remember, these are business decisions that need to be handled behind the closed doors of your business operation.

5.   Always have you landlord present you with the first proposal. This not only will lay the groundwork for a possible counter proposal by your team, but it will reveal what position the owner is angling.

6.   Once you get your proposal from the landlord, always counter. Even if it looks like a great deal with everything you want, 99% of the time you can get more if you simply counter. In addition, you should always ask for more than what you want, that is, if you have a leg to stand on.  Typically a back and forth takes place, so do not begin by asking for too little.

7.   You should not put stock into how long you have been at your current property, how many times you have paid your rent on time, or how little you have called to report problems at your space. None of these items will present you with a better deal.

8.   You should avoid having side conversations or direct conversations with your landlord or their representative. This can hinder your tenant representative’s negotiation power and can muddy the waters if things were promised in a side-conversation that your representative was not privy.

9.   Your business should try and keep only those who need to know on a “need to know” basis. Rumors spread fast, especially among co-workers. You do not need the latest updates on your renewal negotiations to be made aware. In the end, this will hurt your negotiation efforts.

10. Lastly, I always recommend to my clients that you seek the assistance of a real estate lawyer before signing any legally binding documents. A good time to bring in an attorney is often when a lease document is produced for the tenant’s review. It is the attorney’s job to find the glitches, problem areas, and other questionable sections in the often lengthy lease document, that may not be in your best interests. If there are any, they should produce alternatives to the lease section language or suggest deleting it all together.

Reprint from  Leasing Houston .org

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Categories: Leasing, Uncategorized
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