Common Renewal Mistakes, Part 1 of 3

One of the most common mistakes we see office tenants make is negotiating a lease renewal on their own. In doing so they miss a huge opportunity and lose truckloads of money. While more than 90 percent of companies looking for 5,000 square feet or more rely on the expertise of a real estate professional to find and negotiate a new-space lease, these same companies abandon this tried-and-true approach when renewing.

They choose instead to go it alone, negotiating without professional representation because they minimize the gravity of the situation and feel it’s “only” a renewal. When in fact, renewal situations are a great time to extract concessions from your landlord if you know how.

Approximately 80 percent of tenants who negotiate directly with their landlord simply stay in their current space. When your landlord assumes you’re unlikely to move, your negotiating leverage is eliminated.

Tenants who are “only renewing” need professional representation even more than when they’re searching for new space. Here’s how a pro can help you out:

1. Send the right message

Landlords do offer concessions to renewing tenants when and if they know they’re competing for your tenancy.

2.  Experienced landlord vs. inexperienced tenant:  who wins?

It’s not a fair match when you consider the landlord and their team negotiate multiple deals a year, while most tenants are only involved in a handful of leases in their entire career.

3. Cost

Your out-of-pocket cost for a commercial real estate broker is a nice round number: $0. A tenant representative’s fee is paid by the landlord as a percentage of the lease value.

(to be continued next week)