Because on average 70% of tenants end up renewing their leases without considering other alternatives or negotiating with the landlord. If you don’t give yourself time to evaluate and compare other options to your existing space and let the landlord know that you are considering relocating you will never have the negotiating power that a new tenant has.
Three Mistakes You Want to Try to Avoid
- Dealing with the landlord directly
- Waiting until the last minute to start lease renewal negotiations
- Not evaluating and comparing other alternatives to your existing space
Dealing with the landlord directly
Chances are that if you deal with the landlord directly they have a pretty good hunch that you are not planning on moving and will renew your lease. You need to consider what alternative options there are in the market. The best way to do this is to hire a tenant representative. A good tenant representative will thoroughly research the market and request proposals from other landlords. Doing this creates leverage and makes the landlord offer you the best lease rates and terms possible. The landlord will treat you as a new tenant thus offering you the best deal possible.
Waiting until the last minute to start lease renewal negotiations
Many tenants wait until the last minute to start the lease renewal process. Doing this leaves you NO time to research and find alternatives and create a competitive landscape for your tenancy. The earlier you start the process the better. If you are leasing less than 10,000 sf then starting at least 4-6 months before your lease expiration date should be fine. If you are leasing more than 10,000 sf then allow at least 6-12 months before your lease expiration date. The timelines mentioned here are guidelines as there are many factors that will have an affect on the timeline such as existing market conditions, size of space, build out time if needed, available space, etc. This process takes time so do not underestimate this!
Not researching and comparing other options to your existing space
You need to treat every office lease renewal as if you were leasing space for the first time. Even if you don’t want to relocate you need to explore other alternatives and compare those to your existing space. Doing this will give you some negotiating power with your existing landlord.
Overall is has probably been 3-5 years since you last leased office space so this renewal time will give you the opportunity to reevaluate your current and future real estate needs. Before you start it’s important to consider current and future growth needs, technology requirements, and other needs such as parking, transportation, ideal space configuration, and budget. Work WITH your tenant representative to identity alternatives (on/off market) and create a real estate game plan based on your current and future business needs. By evaluating and comparing all your office space options to your office lease renewal option you will incent your landlord to offer you a better deal. In the event your existing landlord will not work with you then you will have the option to relocate AND the time to do it!