70% of expiring office space leases are renewed. Renewing an office space lease seemingly makes life easy for both the tenant and landlord. However, this doesn’t mean renewal is without complications. Be sure to utilize these four tips when an office space lease renewal is nearing.
Compare Costs & Risks of Staying vs. Leaving
If you’re on the fence as to whether you should stay or go, take the time to analyze the costs and risks of leaving for another space. Are current rent trends in the area favorable to you or could a similar space be found cheaper nearby? Will moving disrupt a few days of business and lead to lost revenue? Are any tenant improvements needed at either your current location or a new space you have your eye on? The better prepared you are going into negotiations, the more leverage you have when renewing an office space lease.
Thoroughly Search for a New Space, Don’t Just Say You’re Looking
Tenants will sometimes tell their landlord they’re looking at other spaces as a leverage angle. Don’t just say it, do it. Your true leverage comes with thorough knowledge of the market and knowing what’s out there. This is still a mostly tenant-friendly market for the foreseeable future. Never let a landlord feel as if he or she is presenting you with an offer you won’t find elsewhere. The only way you’ll be able to do this convincingly is if you truly know what’s out there. You need to have a clear idea of you’re target rent range before you sit at the table.
Consider a Tenant Broker
We get it. You’re running a business. Maybe there’s just no time to put in the due diligence needed to familiarize yourself with the market. There are several reasons landlords feel they have the advantage when it comes to lease renewals. For starters, they know moving is inconvenient and potentially counter-productive to your bottom line. They also think they know the marketplace better than you do. Having a tenant broker tells the landlord that you’re serious. You’ve brought a real estate professional into negotiations that will ensure you make an informed decision. It will be difficult to pull one over on you with a tenant broker consulting you.
Know Your Landlord’s Current Situation
Knowing your landlord’s current situation gives you insight into what kind of leverage (if any) you have headed into negotiations. For example, if you know potential occupants are beating down the door to get into the building you’re residing in, the landlord likely has the upper hand. If multiple spaces are unoccupied, or you know there are considerable building debts, you’ll know you have a little bit of an advantage going into negotiations.