9 Tips When Negotiating Your Commercial Lease Renewal

January 22, 2020 Don Catalano Don Catalano

Landlords don't expect prospective tenants to sign the first draft of the commercial lease that they are presented. Negotiation is a routine part of the leasing process, making it important that you prepare yourself to head to the table. These tips will help to ensure that you end up with the most favorable lease possible.


1. Leave Yourself Enough Time

Negotiations for commercial leases can be lengthy. If you don't start your search for new office space early, time constraints can cut negotiations short, forcing you to sign a lease that's less than ideal.


2. Use a Tenant Rep Broker

Tenant rep brokers assist with more than just the search process. During negotiations, a tenant representative can act as your advocate, helping you fight for the changes to the lease that are most important to your company. Plus, a tenant rep can function as an advisor to help you evaluate the landlord's offers.


3. Establish Your Priorities

When you walk into a commercial lease negotiation, you need to know exactly what you're trying to gain. Have a clear picture of the deal breakers that your company absolutely requires, and establish which changes to the contract are less important. This way, you'll know where you can bend to reach a compromise.


4. Know the Market Going In

Having a thorough understanding of the market in the area where you are leasing is a powerful weapon during a negotiation. When you can point out to a landlord that what they're offering isn't in line with current trends, it's much easier to make a persuasive argument.


5. Don't Think of Base Rent as Set in Stone

The base rent stated in the first version of the lease can be thought of as the sticker price on a brand new vehicle. It's a starting point for a negotiation, and most landlords do not expect tenants to settle for that number.


6. Consider Going Long Term

Because they provide more flexibility, short-term leases are the right option for many companies; however, if your business is well established and you feel confident that a space can continue to meet your needs over a long period of time, accepting a long-term lease can give you more negotiating power.


7. Add Clauses That Protect Your Interests

Clauses like co-tenancy and subleasing and assignment help to protect your company over time. It is especially important to request the inclusion of these types of clauses if you are opting for a long-term lease.


8. Save Rent Abatement Requests for Key Moments

Rent abatement, a period of free rent given to tenants, costs landlords virtually nothing. Most landlords are more than willing to agree to a rent abatement, especially in place of other costlier concessions like a large tenant improvement allowance. If you reach an impasse with the landlord at some point during the negotiation, you may be able to break through by asking for a rent abatement instead.


9. Have a Backup Plan in Place

Even if you have your heart set on a specific office, keep your options open, so that you don't have to start from scratch should a deal fall through.


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