For some businesses, location is everything. Five Lease Renewal Myths Many tenants have preconceived notions regarding a lease renewal or how they typically work, and quite often these ideas are inaccurate or completely wrong. Learn to: Use professional negotiating strategies and tactics Negotiate the lowest rental rate Find the best location for your business Negotiating a lease? Coordinating the move of an existing business between two buildings is more complicated than moving into a building for the first time. If there are things you really like about your location, it pays to try and duplicate them in your new spot. You know whether you can work in an oddly shaped space or if you really need a large open rectangle. A landlord may have a unreasonable or large radius restriction preventing you from opening your second location as desired.
You know whether you can work in an oddly shaped space or if you really need a large open rectangle. The commercial real estate market is dynamic. While a retailer thinks of marketing, markups, and managing, savvy real estate agents and brokers are specialized sales people. Not only is it important to include such language, for many tenants, the exact wording of the language can make all the difference. This is the only way to have a successful negotiation. And remember: Everything is negotiable.
Agents and brokers typically work for the landlord who is paying their commission. Maybe you overestimated or underestimated your needs in your present building. The client had already engaged the landlord in lease negotiations but was unhappy with the outcome. For example, market conditions and availabilities may have changed since you signed your last lease. The more time you have to put the deal together and make counter-offers, the better the chance you have of getting what you really want. Information that can save you a lot of money. Taking a strategic approach will show the building owner that you have done your research and are in a position to negotiate.
Your business history is also important. Is a building with restaurants nearby important, or can you and your employees brown bag it? It is more productive to negotiate in stages over time. For retail businesses, expect to pay 10—15 percent of your projected gross sales on rent and operating expenses. The content on this website is protected by the copyrights of Retail Insider Media Ltd. From one of the industry's most respected and experienced consultants, Negotiating Commercia. This lack of knowledge can come back to haunt them in numerous ways.
And you know the building actually exists — something that might not always happen with undeveloped properties. Have your rental payments been made on time? Each chapter covers one broad topic area. In cases just like these, it is pivotal to know your value in the market—and for your landlord specifically—and leverage it accordingly. A good retail business in a poor location will become a poor business. You need to pay close attention to the wording of this clause or it could turn out to be a costly scenario should it ever occur. The Lease Coach frequently successfully negotiates for a reduced or returned deposit at this time.
. You must also be cautious of existing language within this clause; in some cases, the wording allows the landlord to simply terminate your lease if you request an assignment or allows the landlord to remove renewal options or other terms for the new tenant. Whether it be parking, signage, improvements to the space, or simply adding more renewal-option clauses, your renewal is the time to deal with these issues. This will give you sufficient time to look at other sites and do your homework. It's a book that is worth reading if you deal in this area. The inflation rate for various cities varies, and sometimes the economy is in a period of recession. Offers balanced discussion of the practical applications of the law from the landlord, tenant and the lender perspectives where applicable.
Ask yourself, are you a security risk? This may never come into play for many tenants, but there may be situations in which you must remain in your space an extra couple months, and your rent potentially doubling or tripling during that time could be very costly. Roll up your sleeves and get informed — the decisions you make during lease negotiation can profoundly affect your bottom line. Retail tenants should remember that it is okay to negotiate assertively. It is important to know the dollar amount associated with keeping you on as a tenant, and leverage that information to help win back a portion of this profit when renewing your lease. Draw in a higher-class clientele? For many, negotiation can be tricky and slightly intimidating. Maybe you've even thought about running one of your own, but didn't know where to begin. Each year, we speak with hundreds of tenants who attend The Lease Coach seminars or contact us directly for lease-renewal assistance.
After all, your tenancy is proven, plus there is much less risk for the landlord putting cash into your renewal than taking a chance on a new tenant. Your renewal option, if you have one, must be viewed as a safety net or backup plan. Most retail business tenants are paying their rent per square foot, but often they are not receiving as much space as the lease agreement says. Their clear, concise discussions will guide you step-by-step through each phase: Land and space acquisition Creating the owning entity, design and construction, due diligence, interim and term financing, and occupancy leases The ultimate sale or disposition of the project In addition, Commercial Real Estate Transactions Handbook is logically organized by topic, so you always find the information you need quickly and easily. But rushing into a new location is one of the worst things you can do.
In some cases, your landlord may be willing to incur some of the update costs if it means keeping you on as a tenant. You need to pay close attention to the wording of this clause or it could turn out to be a costly scenario should it ever occur. Regularly Stay Informed of Market Conditions A lease is a significant investment. With our help, the client was able to renew the lease about six months early, reaping immediate savings. Often, the higher the rent you pay, the more commission the agent earns.