Negotiating commercial leases: Renewal rent reductions
Friday, September 21, 2018
For many commercial tenants, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing his own business, savvy real estate agents and brokers are specialized sales people. Their job is to sell tenants on leasing their location at the highest possible rental rate.
Tenants may go through the leasing process only two or three times in their entire lifetime — yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for a commercial tenant as the amount of rent he or she pays will directly affect the entrepreneur’s financial bottom line.
Whether you are leasing a new for the first time or negotiating a lease renewal for your business, here are some tips:
Renewal rent reductions
Achieving a rent reduction on your lease is a very real possibility. If the landlord is leasing commercial space to new tenants at less that you are currently paying, then a rent reduction should be a given.
If the current rental rate is artificially high because of your last tenant allowance, a rent reduction on your renewal term could well be in order. Do your homework and talk with other neighboring tenants to see how much they are paying.
Negotiating for free signage
Many commercial tenants pay rent for signage, but forget to negotiate it entirely. Whether it’s pylon signage, a fascia sign, or a company directory board, you may be able to negotiate —firstly, for a rent reduction and secondly, for a free rent period on the sign rental.
If your company uses pull-away signs, negotiate hard for this now as most landlords have policies in place regarding all signage criteria.
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