How Are Renewal Rates For Commercial Leases Determined?

How Are Renewal Rates For Commercial Leases Determined?Renewal rates for commercial leases depend on several factors (current market conditions, supply and demand of the type of space you are leasing, & if you are properly prepared to negotiate).

Current Market Conditions – When determining renewal rates for tenants landlords hire experienced commercial agents to consult them on current rates in comparable buildings, concessions other landlords are giving, etc.  The amount they increase the rates to will depend on what the other landlord’s are doing.  If they know that what you are looking for does not exist anywhere else they will raise their rates as much as they can get away with.  There is not a cap on what they charge.  They will just charge as much as you are willing to pay.

Supply and Demand – If demand is high and supply is low landlords are going to increase their rates.  Their goal is to make as much money on their building as they can.  So when there are not many other options for you to consider they will raise their rates…… as much as they can get away with……….AND…… try to lock you into a longer lease so they can make money on your tenancy for a longer period.

Are You Prepared to Negotiate? – The best way to combat increased commercial lease renewal rates is to start the process early (6-12 months before your existing lease expires), hire an experienced Austin commercial realtor to negotiate on your behalf, have options, be willing to move if necessary.

We have written several articles on how to negotiate your commercial lease renewal because we have seen too many tenants pay more than they should for space.  In the articles below we provide many tips on how to effectively negotiate your commercial lease renewal.  If you would like help with your Austin commercial lease renewal don’t hesitate to contact us.

Commercial real estate lease renewal myths

Negotiating office lease renewals

 

 

 

 

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