What Every Tenant Should Know About Lease Renewals
Your lease is expiring soon and you have six months to renew or relocate. The most common mistake tenants make is to assume that the building’s management is going to give them the best deal. They think that by going direct, they are exhibiting good will and it will make a smoother renewal process.
Ask yourself one question: Who does the property management work for?
Property owners are savvy and like any savvy business person, they are going to hire someone with expertise on their behalf to represent their best interests, so why wouldn’t you?
How do you know a stronger deal can be negotiated than the one being offered?
When I review your lease proposal and it appears that your option to renew is better than what I could achieve for you, then I will tell you just that and you proceed to accept the option. We aren’t reinventing the wheel here, however, in most cases, there are numerous points to be negotiated. If you are not negotiating leases on a day to day basis, then by no fault of your own, you are not aware of current market conditions, what to look for, or what other Landlords are not only offering, but actually delivering. By having a broker review your lease, you are at no obligation to move forward and it can only benefit you, but if you don’t seek a broker’s expertise, you will never know if you got the best rental rate or the amount of concessions and tenant improvements you could have gained and, more importantly, the amount of money you could have saved.
Time is your Frienemy
Do not procrastinate with your lease renewal. It is no secret that moving and build-outs are not only costly, but timely for everyone involved. Don’t think that your Landlord/Management isn’t seeking out options on their end as well. Make time your friend. You don’t have to take it out for steak dinner and a couples’ massage, but give it the respect it deserves. Numerous people will contribute to your race against time. Attorneys, contractors, managers and brokers are going to be involved in your deal on some level and they too have priorities. The longer you put off starting negotiations, the less likely it is that you will relocate, therefore, giving the landlord leverage to not offer you a better deal.
Who Pays the Broker’s Fees?
Most Landlords will pay the brokers commission. They are usually glad to do so because in the end, they are saving money by not having to lease your space to a new tenant. In the unlikely event that the Landlord won’t pay the commission, the broker will work for a fee from the tenant, but that cost will more than pay for itself with the amount of money you will save by having an experienced broker representing you.
About the Author
li Willingham is an experienced commercial real estate agent specializing in tenant representation and lease renewals. She can be reached at firstname.lastname@example.org or at 310-943-8548.