Can You Renegotiate a Commercial Lease?

how to renegotiate commercial leaseRenegotiating a commercial lease is possible if your business or the market changes and you are unsatisfied with your current situation. There are no guarantees that the landlord will agree to your requests however you will never know if you don’t ask.

Business climates and markets can change which at some time or another will require you to make some changes to what you are doing. You have many things to consider and one of those could be making changes to your commercial lease. You might be in a situation where you need to try and renegotiate a commercial lease with your landlord. For example:

  • Business not doing well and having a hard time paying rent
  • Need to expand however your existing building does not have anymore space available
  • Lost a big client and need to reduce the size of your space
  • Market conditions dictating better lease terms

It doesn’t matter if you are only in year 1 or 3 of a 5 year lease, contracts can be renegotiated, however knowing how to renegotiate a commercial lease is key to your success.

How to Renegotiate a Commercial Lease

  1. Start the process sooner than later – The more time you have to the better. Commercial lease negotiates take longer than you think. Ideally you want to start the process of commercial lease renewal negotiations at a minimum 6-12 months before your lease expires. That way you have enough time to get educated on market conditions to prepare you to have intelligent discussions with the landlord. Additionally you will want enough time to evaluate alternative locations to create leverage with your existing landlord and in case they are being unreasonable.
  2. Get some help – Consider hiring a commercial real estate attorney and commercial real estate agent to assist you. They know the laws and the current market conditions and will be able to consult you on your options. A good Tenant Representative knows the market well and can help create leverage to encourage your landlord to offer a better deal.
  3. Get educated – Get up to speed on market conditions and read your commercial lease contract thoroughly. It’s important that you understand how to interpret the lease. Your agent will be able to get you up to speed on the market. The more market knowledge you have the better equipped you will be to negotiate a better deal.
  4. Schedule a meeting with the landlord – When trying to renegotiate a commercial real estate lease it’s better to do it in person. If the landlord sees that you are sincere and being proactive you will have a better chance.
  5. Be prepared to trade concessions – Landlords are not going to just give you everything you want. They will typically want something in return. For example if you want more tenant improvement allowance you may have to commit to more lease term. Or if you want to get out of your lease they may require you to pay some money upfront.
  6. Communicate with the property manager – Just like with the landlord you want to have a personal relationship with them. They will have more incentive to work with you if they like you.

If you have any questions or need help renegotiating a commercial lease in Austin Tx give us a call.

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