More times than not a company would rather stay put and renew their lease rather than have to move their office space again. This tends to make landlords happy since it typically cost them less money to renew a space than having to lease it to a new tenant. Tenants also may be happy since they did not have to endure the cost and hassle of moving, however did they do what was needed to ensure they got the best deal on their office lease renewal? Probably not! Tenants must always negotiate the lease renewal the same way they would a new space. Below are a few strategies to follow.
Calculate the total cost of relocating vs staying put and renewing
It's important that you consider all the risks and costs (e.g. moving costs, etc.) associated with leaving your existing office location for another. Also consider what the current market lease rates are for comparable buildings.
Search for comparable office space alternatives
Don't just do a quick search on the internet. Actually do some due diligence and thoroughly search for available office space comparable to yours. Compare each location to your existing location (size, lease rate, tenant improvement dollars available, lease term, etc…).
Consider hiring a commercial realtor that specializes in office space
Landlords feel like they are in the drivers seat because they feel like they know the office market better than you AND most companies wait until the last minute and don't have time to spend the time necessary to research the market. Hiring a tenant representative can help level the playing field. The landlord will understand that you have just as much knowledge and experience on your side and will take you more seriously. Also, your realtor will do all the heavy lifting empowering you to make informed decisions.
A few factors to consider when renewing and office lease
- Know what the landlords ultimate goals are and their buildings current situation (e.g. vacancy and occupancy rates, etc.)
- Get to know your lease. It's always a good idea to review your lease once a year to make sure you understand each provision and how they affect your business.
- Start your office lease renewal process at least 6-12 months before you lease expires. Check your lease. Most leases require that you give notice of your intention to renew 9-12 months ahead of time.
- Know what your ultimate goals are. What is your monthly rent target? What can you afford?