Effective Negotiation Techniques When Renewing a Lease

Effective Negotiation Techniques When Renewing a LeaseWhen renewing a commercial lease tenants are often at a disadvantage and the process can have a lot of uncertainty.  Don’t forget, Your commercial landlord is a seasoned investor and negotiates leases and renewals on a regular basis.  They also hire the best possible commercial listing agents and attorney’s to advise them on market conditions, lease rates, negotiation strategies, contract reviews, etc.  You only negotiate commercial leases every 3-10 years.

Additionally landlords are comforted by the fact that tenants typically renew their commercial lease 7 out of 10 times.  They know that tenant’s do not like to be burdened with the cost and time of having to find new commercial space and relocate.

To gain an advantage in an otherwise unbalanced situation tenants would be smart to leverage as many negotiation techniques that they can.

  1. Hire a commercial realtor that specializes in ONLY representing tenants.  A good agent is just as experienced in negotiating commercial lease renewals as the landlord or their listing agent.
  2. Hire a good commercial real estate attorney.  Together an attorney and your tenant representative can work together to negotiate against the landlord to ensure you get the best business terms and contractual conditions.
  3. Avoid having too many employees help or know about the process.  This will avoid any important information from leaking out to the public during negotiations.
  4. Make the landlord present the first offer to renew the lease
  5. Never accept the landlords first offer.  Always ask for more than you want
  6. Start the process early.  You and your team will want plenty of time to evaluate the market for comparable options and are able to find another option in the event a bad deal happens on one.
  7. Regardless of whether you do not intend on moving let the landlord know that you are entertaining other options.  You want to create a little competition between landlords for your tenancy.
  8. This is business so do not get emotional.
  9. Don’t think that just because you have been a great tenant for the last 10 years that the landlord will give you a “special” deal.  They are in the business of increasing their ROI not giving $$ to tenants.
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