5 Things To Do Before Your Lease Expires
By Tim Sleeper, CRE Acquisition Specialist
You're busy keeping your company afloat. It feels like you just barely got settled in your current location when you realize that you've got less than a year left on your lease term. You're not ready to think about a renewal or a potential move, but here are the top 5 things you need to do before it's too late:
1. Know Your Notice Date
Options to extend are likely incorporated into your current lease agreement. Put a big "X" on the calendar on that date and prepare to be market informed before that day comes.
2. Know The Market
It's impossible to make a good decision about an upcoming renewal unless you have a good idea of the rental market for similar space in your area. It's easy to find available commercial space on the internet these days, so take 30 minutes to investigate comparable locations and their cost. Talk to other tenants in your building to inquire about their terms, incentives and tenant improvement allowances. Information always precedes a successful negotiation. You can't go blindly into a conversation with your landlord and expect favorable results.
3. Know Your Concessions
Landlords love to entice folks with tenant improvements and free rent at the front of the term for new occupants in their buildings. The base rental rate over the initial term is increased to reimburse the landlord for these concessions. Renewal options then establish a new price point above and beyond the rent paid in the final year of the term. Don't forget to fight for a discount in any renewals if no additional upgrades are needed at renewal.
4. Know Your Optimal Square Footage
The pandemic has forever changed how we utilize commercial space, whether it's office, retail or industrial. Complete an internal audit prior to your notice to renew date. Technology platforms are continuously rolling out that can help you minimize your footprint and maximize efficiency in human resources, manufacturing and logistics.
5. Know Your Process
Flexibility is the greatest competitive advantage your business can achieve in the modern world! Fight for the shortest lease term possible on a renewal. Keep records of the internal processes required to complete this exercise in order to increase efficiencies on the next transition. All of the worst commercial real estate deals are negotiated from a desperately timed position where multiple options are not available. If your landlord knows that you are prepared and ready to vacate, only then will you be able to get the best deal possible on a renewal or feel confident about moving.
Of course, our experience in unbiased, transparent and comprehensive representation at Logical Move can help you navigate the murky waters of this phase in your commercial occupancy!! At no cost to you, we can show you how to use commercial real estate information to your advantage and negotiate on your behalf. We are happy to complete an abstract of your lease agreement in order to help you determine the best strategy. Contact us before your notice date for optimal results.