Lease Renegotiation How To Get Better Terms
Posted: Thursday, January 22, 2009
by Rick Rakow
Rakow Commercial Realty Group, Inc.
These days, every expense your business incurs has the potential of turning your ledger ink from black to red. So you might want to think about the advantages of renegotiating your commercial lease. Not only does a commercial lease renegotiation help your business, it also helps your landlord as well.
What Is Lease Renegotiation?
Simply put, a commercial lease renegotiation is an opportunity for tenants to reduce rent, reduce or expand square footage, renew or extend lease terms and, if necessary, terminate the lease.
When Should You Renegotiate?
The best time to consider renegotiating a lease is at least 12 to 18 months prior to the expiration of the current lease. This way, if the renegotiation is not successful, you will have sufficient time to look for alternative arrangements. The absolutely worst time to start the renegotiation process is just prior to the lease's expiration. Make sure you leave yourself and your landlord enough time to work out the details.
Who Benefits From Lease Renegotiation?
On the surface, it seems that tenants have the upper hand when it comes to commercial lease renegotiation. Property owners make nothing if they can't fill the space, which is a big advantage tenants have. However, for tenants already occupying a property, the costs associated with having to relocate could outweigh the savings on the lease. With both sides looking to come out with the best deal, it makes sense that all parties settle on an agreement that is beneficial to both.
A professional commercial real estate group is your best bet when it comes to renegotiating your commercial lease. They will review your current lease, including terms and conditions, appraise your site and space to see if it meets your long-term business goals, establish your negotiation goals, determine what "leverage" you and your landlord may hold, and create a renegotiation strategy. Only then can the sit-down with the landlord begin.
Rick Rakow is president of Rakow Commercial Realty Group Inc. (www.rakowgroup.com). Based in White Plains, Rakow Commercial Realty Group Inc. has served the needs of tenants seeking space for more than 17+ years. In the last 18 months, alone, Mr. Rakow has negotiated leases and purchases valued at over $35,000,000 including one of the largest leases in Westchester County last year, 40,000 square feet at 660 White Plains Road, in Tarrytown, NY for Ampacet Corp.
Great suggestions. Often times people do not consider the need to bring in a professional to help negotiate a lease.
