The landscape of corporate real estate has experienced unprecedented shifts in recent years. Since you signed your lease, the market has undergone dramatic change. You may no longer be getting the best deal, terms, or property for your needs.
If you’ve been in your existing leasing agreement for several years, you are bound to wonder what else is out there. Are you missing out on deals and properties that didn’t even exist when you signed your lease? Or, are you still paying elevated rates for rent as the property value of neighboring commercial spaces plummet?
You don’t need to worry. We are tenant representatives who are experts in market intelligence. By working in real estate for over three decades, we know when and how to get clients out of expensive leases. If you feel that you may be able to get more out of your lease’s terms or you’re just curious about what the market has to offer since signing, you now have space to decide if renegotiating is right for you.
Read on to learn more about how you can identify if there is a need for you to renegotiate, how to do it, and what your options are throughout this process.
Who Should Consider Renegotiation?
In this market, any company has room to negotiate the terms of their lease. Tenancy is extremely valuable, and as a result you have the right to pick and choose what you want in a property. If one landlord doesn’t match your asking price for rent, tenant improvements, or other terms- another will.
You have the freedom to express your wants, needs, and demands for your corporate space. This is particularly true if you are several years into an existing lease. Chances are that since you signed your lease, the market looks completely different. Therefore, the terms and price you signed on may have been advantageous at the time, but you may no longer be getting the deal you thought you were.
You may be paying elevated rent due to escalations while the market prices of neighboring properties are plummeting. If this is true for you, don’t get frustrated. Just because you signed a lease doesn’t mean that you don’t have rights to renegotiate.
You Have Power to Get the Terms you Want
The market has opened up for tenants. Landlords are on the hunt for reliable, credit-worthy tenants. Since the work from home revolution, they are also more willing to concede on terms that benefit you. Remember how powerful your prospective business is to them.
If you are several years into a lease, you may think you have to wait until it expires to pounce on the real estate market. This is simply not true. In fact, as a longstanding tenant, you have more leverage to introduce your preferred terms to your landlord. You already have an existing relationship with the landlord. Therefore, they may be more willing to renegotiate to keep your reliable income and presence.
Why Landlords are Willing to Negotiate
Many tenants wrongfully assume that they are trapped within the original terms defined in their lease. While your lease is a legally binding document and should be adhered to, you do have the right to introduce prospective negotiations.
The worst possible scenario for landlords is vacant space. Once you know this, you can understand how truly valuable your tenancy is. Your landlord wants to take as few risks as possible with their budget and properties. This often means doing whatever they can to keep you in their spaces, especially if you have a reputation as a reliable tenant. Keeping you ensures that they can rely on an established, trustworthy monetary commitment.
New Tenants are Complicated.. and Expensive
There is a great deal of uncertainty surrounding the process of acquiring a new tenant. Your landlord usually doesn’t know how long it will take to get someone new in your old space. It could take them three weeks or six months. No matter the time period, they are on the hook for all of the costs associated with owning a building until they find a new tenant to cover the costs.
That means they are rapidly losing money to upkeep, mortgage payments, maintenance, and any other operational costs. To avoid this fate, landlords will always aim for 100 percent occupancy of their spaces. In pursuit of this goal, they may be more willing to compromise when defining the terms of your lease.
Your Landlord Wants You
Your landlord wants to keep you in their building. You represent guaranteed income against the uncertainty surrounding the costs of a new tenant. They know that bringing in new tenants means spending money on marketing to get them to find the space. Then, they are faced with any prospective build-out improvements the new tenant wishes to make. All the while the clock is ticking until they are able to move in a new tenant and actually make a profit on their agreement. Renegotiating your current terms may make the most financial sense to them if the alternative is losing your business.
You have more leverage in renegotiating if you are further into your lease’s terms or you are initiating a longer term. To the landlord, this means a longer period of guaranteed income. As a result, they will be more willing to throw extra perks into your leasing agreement.
How to Negotiate
Your landlord will not be willing to negotiate unless they have a reason to. It is up to you to remind them of how valuable your tenancy is. The best way to do this is creating competition amongst other landlords for your commercial real estate portfolio.
If you don’t know what the market is offering and the prices of similar properties, you don’t know if you are getting a deal. Your current space was the best option for you when you signed your lease- is it still? There may be new properties that didn’t even exist before that may better suit your current needs.
Essentially you don’t know what you don’t know. If you are not familiar with the current market and going rates for buildings like yours, you have no footing to assert your claim for renegotiation. Introducing negotiation to your landlord with another prospective offer will motivate them to accommodate your asking points. If they fear they may lose you, they are usually more willing to compromise.
If You Feel Overwhelmed...
However, not everyone may be comfortable in the world of real estate arbitration. If you don’t feel prepared with the appropriate market intelligence, you have options. Tenant reps are experts in scouring the market and running negotiations with landlords. They know how landlords run deals and when they would be willing to agree on better terms for the tenant. They work solely for the tenant, so, you can be ensured that your interests are protected.
Better terms for your lease could mean many things. For one, it could represent resetting your escalated rent to market value. In other cases, you could get more tenant improvement dollars to alter your old space to fit your current needs. There are innumerable other terms or additives to be thrown in during renegotiations. It all depends on your landlord, their representation, and what you come prepared to play ball with.
Tenant Reps Can Help
If you do not feel comfortable creating competition for your tenancy, a tenant rep will. Doing this is pivotal as landlords will be incentivized to negotiate when you have knowledge of other viable properties in the marketplace.
If you are tired of paying for heightened rent rates or wondering what else you could potentially get out of your lease, it could be time for you to speak to a tenant representative. Click below to schedule a quick consultation about the potential you have to renegotiate your lease.