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Renewing a Commercial Office Lease

Negotiate the best deal for staying put

By Rob Fanjoy
It would seem that renewing your property lease would be a simple thing, but there are some common and costly mistakes you could make. Sometimes market conditions are in your favor and you can save money by renegotiating some key details.

Some of the most common things to consider include:

  1. Renegotiating a security deposit.
  2. Obtaining a refurbishment allowance.
  3. How to make the owner aware that there is competition for you as a tenant.

 

Legal help

If you're planning on asking for lower rent or more space improvements, you'll want to document that, with facts regarding lower foot traffic than represented or a downturn in your industry, for example.
Try: Often, you may need a lawyer's help to negotiate the best deal on a commercial lease. If you don't have one, you can find one at Lawyers.com. Also, you can research real estate law and get advice in their Real Estate section, which has a quick guide to Commercial Leasing.

Analyze proposals and responses to proposals

There may be many elements in both your and the owner's proposals and responses that need comparison. Learn all you can about what you can ask for and what the owner has to provide before you sign.
Try: Commercial real estate guide CityFeet.com has a large Business Resources section with a fairly comprehensive Leasing Guide to give you a little more than the basics.

Make a checklist

In many states, commercial leases are not covered under consumer protection laws that normally safeguard tenant rights. Therefore it is critical that you carefully examine every aspect of the lease and renegotiate a favorable term before signing.
Try: At Business.gov, the official business link to the U.S. government, you can find helping advice on leasing in Launching Your Business, Pick a Location and Leasing Checklist.

 

  • If you need to resolve a dispute, mediation or arbitration is often better than court.
  • Figure out exactly how much space is being rented and which areas are included. Finding discrepancies in reported space and actual space rented can be a powerful bargaining tool.
  • Make sure that the portion of the utilities you agree to pay is in proportion to the percentage of the building that you occupy.
  • If your business fails or if the location no longer suits your needs, one option is to sublet; find out if you have the lessor's permission to do so.

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