In my previous article, I discussed that a lease renewal is part of your renting commercial space. I shared that the landlord plans ahead, but if the Tenant does not, it could cost them tens of thousands of dollars. This article will cover how being prepared can benefit you.

Having a plan is the most important part. You could do this by yourself by doing your own research. However, there is the old adage, time is money! Why would you take time away from running your business or risk gathering faulty information, when you could hire a broker for free? It is unlikely that you have the same resources that a real estate broker does. A good Tenant Rep. broker that specializes in lease renewals will know how to plan ahead and negotiate a deal that will ultimately save you money. 

Lease renewals are tough and having the right team in place will give you the leverage needed to get favorable terms. A good Tenant Rep. broker will know how to negotiate the following:

1. Lowering the lease rate
2. Obtaining Tenant Improvement allowance 
3. Securing Free-rent
4. Negotiating an early termination clause
5. Negotiating a favorable assignment and subletting terms for potential business sale

All of this and more can be attained with the right Tenant Rep. broker assisting with your lease renewal. 

It is important, however, that you do your research on the broker or agent that you are hiring. The most important thing is to make sure they are licensed in the state that the transaction is taking place. You certainly don’t want an unlicensed broker representing you. In addition, make sure they have experience. You don’t want someone cutting their teeth on your deal. This could cost you thousands of dollars. It is perfectly fine to ask for references, and a broker that isn’t willing to provide them should not be hired. I also recommend that you make sure they aren’t landlord brokers, but that they specialize only in Tenant Representation. The reason this is important is that they could be negotiating against you or not fighting as hard because their firm wants to get more listings. 

A broker that hasn’t negotiated a lease renewal before will not know what to expect nor be able to plan for it. Remember, a Tenant Rep. broker has a fiduciary responsibility to you when you sign their agency agreement. If you don’t sign anything and they offer to help you, it is probably because of what I mentioned in the previous paragraph.  

You need to be aware that most landlords don’t appreciate a Tenant hiring a broker. The reason for this is because they know that they aren’t going to make as much money as they wanted. The landlord will call you and try to convince you not to have a broker involved. They will make statements like, “I’m not paying your broker”, “I will charge you more for having them involved”, “If you fire them, I will take the money I have to pay them and give it to you in concessions.” All of what they say is a threat that you will need to navigate and trust that the broker you hire will be able to manage.  A good Tenant Rep. broker will prepare you for the conversations that you will need to have with the landlord, not if, but when they call you.

Part of the negotiating strategy is to make sure you know what is available to you in the market. By doing this you are educating yourself, better yet, you know ahead of time what another landlord is willing to give you to earn your business. I can’t tell you how many times I have negotiated a lease renewal where the current landlord was not willing to give any concessions to keep the Tenant. Had I not done my research and negotiated ahead of time on other properties, my client would have had no idea what was available to them. There is something very important that you need to know, as long as you pay your rent in a timely fashion, you are valuable to a landlord. The landlord doesn’t want you to know this, that way they can have the upper hand. If you don’t know what you are worth to them, they can take advantage of the negotiation and leverage your lack of experience and market knowledge. 

It is extremely important that you have a strong constitution. Make sure you state emphatically to the landlord that you will move if the deal isn’t right. Please note, giving on an item or two to get a deal done is perfectly fine. Most landlords understand the principle of “Give and Take.” However, some will not give anything until they have no other choice. That is why having a backup plan or two can help you in the negotiation. Planning ahead by hiring the right broker will save you lots of time and money.  

If you need assistance with finding or renewing an office, retail, or industrial lease and want someone looking out for you, please contact me as my specialty is Tenant and Buyer Representation. The best part about my services is that they are free to you! If you would like to schedule a phone call to discuss further, please click below!

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