A lot of people who rent space for businesses feel that the renewal of the lease on their commercial building is an easy process that mostly happens on its own, but do not be fooled. Your commercial lease renewal is a lengthy process with many considerations to it. Here are some of the common misconceptions that people may have about Commercial Real Estate lease renewals.
The Landlord and I Have a Personal Relationship
You might consider your landlord to be a friend or close associate. However, do not believe that your commercial lease is anything but a business relationship. You might be the best tenant in your building, paying your rent on time every month for years, but you must understand that this is as vital to their business as having a base of operations is to yours.
Your Rates are Likely to Increase
Rental prices are a common complaint. However, you must realize that there is a difference between what your landlord wants to charge you, and what the market agrees upon as a fair price. For example, if your landlord presents you with a ridiculous figure as a start to your renewal process, you can simply analyze how the market trends are doing and counter accordingly. If they are being unreasonable, then it’s time to look for a new space.
Landlords Only Offer Incentives To New Tenants
A lot of the tactics that landlords use to try to lure in new business is offer what are called ‘inducements’ or little perks that a new tenant can receive, Did you know that these incentives are not limited solely to new tenants? If you are trying for a commercial lease renewal, did you know that you too can take advantage of these perks, including months of free rent, or even a tenant allowance? When negotiating your renewal, all you do is ask. The worst they can say is no.
An Option is a Done Deal
While it is true that having an option means there will be no negotiating, sometimes it is not a good deal. An option gives you an automatic commercial lease renewal, but be aware that it is not always on your terms or in line with the prevailing market rates.
I Don’t Need Help
If there is an option on the table with good terms, and you have been a tenant for a few years at least, there is a chance that you can handle the renewal of your commercial real estate by yourself. However, in most cases it is advised to get a professional on board. Recruit a real estate worker who specializes in representing tenants of commercial spaces and have them negotiate a deal that everyone can be comfortable with.
Consider Building Your Own Space
While many businesses are content with leasing space, be sure to consider the possibility of building your own space. A space constructed just for you allows customizations and features that aren’t available anywhere else. In addition, owning your own building provides numerous tax and other benefits that you might not have considered before. When your lease is coming up on expiration, meet with us, so we can help you identify whether this is a viable option for your business.
The commercial lease renewal process is fraught with misconceptions about how it actually works. In the end it is important to negotiate exactly what you need from your landlord for your business. If you are not able to come to terms, identify other potential properties in your area to lease or have a custom space custom built for your company.
