A company’s office lease can be one of its largest expenses. This is a key area that can provide savings yet many businesses overlook their office lease renewal. It is critical to insure that you are engaged early and actively when it comes to renewing your office lease. Here are three steps to insure a level playing field when you renew your lease:
1. First, begin the process at least a year before the lease actually expires. Large tenants (10,000 sf and larger) should begin at least 18 months prior to lease expiration. Why? To insure that time is on your side, not the landlord’s.
In Miami, it can take as long as 6-9 months to construct the average office space if permits are involved. It takes 45 days to move your T-1 line for your phones and computers. The landlord knows this. If you wait until three months before your lease expires, your landlord just won this round.
2. Retain a commercial real estate broker focused on tenant representation – that would be me. I level the playing field in several ways. Most importantly, my knowledge of the market and current conditions enables us to develop a renewal strategy in line with market conditions. It also tells the landlord that you know where you could move if his terms aren’t acceptable.
Tenants who negotiate their own renewals seldom fail completely. If they are savvy negotiators, they usually gain some concessions. However, by allowing the landlord to control the process, the landlord will only give up just enough to make the tenant believe it won. The tenant may never know that what feels like a pretty good deal for them is actually a fantastic deal for the landlord.
3. Landlords know that over 75% of tenants renew – that ratio is even higher for a well-run building, so you must have a viable, acceptable Plan B. Tour the market and know where you could go if you cannot come to terms with your landlord. Force your landlord to compete for your business. When he suddenly realizes that you could and would move, he is compelled to compete for your business.
Typically your landlord is walking into the negotiation with all the cards stacked in his favor. Your landlord is in the business of leasing office space, so he has all the information. Landlords love for tenants to wait to the final months of the lease because then time becomes the landlord’s leverage, not the tenant’s. They will use the iron fist of double rent if you don’t renew prior to the lease expiration. That is one of their best leverage tools.
Your best tool is a knowledgeable tenant rep broker who is focused on creating the best solution for you. Call me for a free renewal strategy meeting.