Common Renewal Mistakes, Part 3 of 3

6. The Only Constant is Change

Markets change; building conditions change; even your landlord may have changed since you last signed your lease. These changes might provide a window of opportunity for you. For example, during lease renewal, you could potentially eliminate archaic requirements such as restoring the space to its original condition upon lease termination, or a large security deposit.

7. Avoid the “Lame Duck” Syndrome

The same tenants who drive a hard bargain when negotiating for new space, roll over and play dead when negotiating a renewal. Frequently, a tenant fails to recognize the potential for change when renewing, instead paying attention to only three or four items.

A lease renewal offers just as many opportunities as the original lease signing, including changing base years for operating expenses and taxes, obtaining free rent and tenant improvement dollars to retrofit your existing space.

If you are signing a five-year renewal for 10,000 square feet with a $30 rent, you are committing to a $1.5 million contract. If it is a 10-year, 20,000 square-foot deal, that’s $6 million. When else would you sign such a major contract without consulting experts, considering alternatives and bargaining for more?

Many tenants opt to avoid “rocking the boat” during renewal negotiations since they must live with the landlord after the lease is signed. However, with an experienced tenant representative, negotiations are handled at arm’s length in a professional, diplomatic manner.

Tenants gain peace of mind by comparing their landlord’s offer with competitive opportunities in the market in order to A) reduce your current costs by 10-20 percent, resulting in $300,000 or $1.2 million of savings respectively per the examples above, and/or B) meet the changing needs of your company through options to expand, contract or cancel your lease.

When it’s time to renew your lease, think twice before going it alone!