Common Renewal Mistakes, Part 2 of 3

4. More dollars at stake

The way you handle your lease renewal is critical. Keep in mind, real estate is your company’s second or third largest expense and its significant impact on your bottom line can’t be overstated.. In this economic climate, landlords are providing free rent, lower base rent and tenant improvement dollars to renewing tenants who know how much to ask for, and how to ask for it, based on market conditions specific to their geographic area.

5. Know what your lease renewal means to your landlord

If you negotiate your lease renewal on your own, it’s impossible to understand their the countless variables your landlord considers and their effect on creating leverage and extracting concessions, such as:

• What are your neighbors doing? This provides a very telling snapshot of the current and pending activity of nearby tenants, and how it is affecting your landlord.

• What is your landlord’s “true” vacancy rate? There’s the landlord’s stated vacancy rate, published vacancy rate (often including subleases) and pending future vacancy rate. In addition, many landlords own more than one building in a particular region. You need to consider the occupancy rate of your landlord’s portfolio, as well as your specific building, to evaluate their perspective.

• How does your building compare? How do other buildings compare in terms of rental rate, location, amenities, class of space (A, B, B-) and more?  This knowledge can give you the confidence to accept a good deal when you see one or, perhaps, just walk away.

(to be continued next week)