10 Tips for a Tenant Negotiating a Commercial Lease Renewal with a Landlord.

By Kelly Cunningham

Preparing for and actually negotiating a renewal with your Landlord is a bit more serious and involved that just agreeing the rent and signing the paperwork. A lease renewal is an opportunity to re-evaluate the market value of your tenancy and unfortunately, too many Tenants just renew with a 3 - 5% rent increase over the current rent. When in fact, the actual market rent could be 20 - 30% less, especially if the Tenant has occupied the tenancy for 2 or 3 renewal cycles of 3 - 5 years each.

Below are 10 top tips on how to approach a renewal negotiation…

1. Start Early: Start negotiating your lease renewal as early as possible, preferably 612 months before the lease expiration date. The earlier you start the renewal process, the more time you have to negotiate and explore all available options. This will allow you enough time to review your lease agreement, research market trends and explore different options.

2. Know Your Lease Terms: Before negotiating a lease renewal, review your current lease agreement and understand the terms and conditions. Pay attention to renewal options, rent increases and renewal notice requirements. Understanding these details will help you negotiate a more favourable lease agreement.

3. Understand Your Market: Research the current market trends and rental rates in your area. This will give you a better idea of what a fair lease agreement looks like and you can use this information to negotiate better terms.

4. Determine Your Priorities: Identify what terms and conditions are most important to you and prioritise them in your negotiations. For example, you may prioritise a longer lease term over lower rent or vice versa.

5. Review Your Business Needs: Review your business needs and consider how they may have changed since you signed the original lease agreement. For example, you may need more or less space now.

6. Review Your Options: Consider all of your options, including renewing the lease, negotiating a new lease agreement or moving to a new location. If you’re happy with your current location, renewing your lease may be the best option. However, if your business has outgrown the space or you need different things, it may be time to consider a new location.

7. Gather Information: Collect information about the Landlord’s needs and preferences, such as their plans for the property or their financial situation. This will give you a better understanding of what they may be willing to negotiate.

8. Negotiate Rent and Other Costs: Negotiate not only the base rent but also any other costs, such as security deposits, guarantees, make good costs, outgoings, legal fees and design review fees. Be sure to understand who is responsible for these costs.

9. Be Willing to Compromise: Negotiation is a process that requires compromise. Be prepared to compromise on some terms and conditions to come to a mutually beneficial agreement with your Landlord.

10. Get Professional Advice: If you’re unsure about any aspect of the negotiation process, seek professional advice from a Tenant Representative. They will be able to assist you with gathering all the market information and undertake the negotiation on your behalf if you want them to. A commercial property lawyer will be able to assist with reviewing the legal terms and conditions of the lease document, once the deal is done, while the Tenant Representative ensures that the commercial terms that were negotiated are accurately reflected in the new lease and the intentions are kept intact.

Your Leasing Co. specialises in representing Tenants and negotiating lease terms for Tenants. If you have any questions about negotiating the best outcome for your renewal and avoiding these costly mistakes, you can call Kelly Cunningham for a free, no obligation conversation and a free lease review on 0419 001 093.

Remember, negotiating a commercial lease renewal is a process that requires patience, preparation and good communication skills. You should approach negotiations with a clear understanding of your needs and priorities and be willing to compromise to reach a mutually beneficial agreement with your Landlord.

Here are a few additional tips to help you through the process:

• Be respectful and professional in all communications with your Landlord. This will help build a positive relationship and improve your chances of a successful negotiation.

• Keep your options open. Even if you’re happy with your current location, it’s always a good idea to explore other options to ensure you’re getting the best deal possible.

• Be realistic about what you can negotiate. While it’s important to aim for the best possible lease agreement, it’s also important to be realistic about what you can achieve. Don’t make unreasonable demands that may jeopardise the negotiation process.

Your Leasing Co. specialises in Tenant / Landlord communication and representing Tenants to negotiate favorable lease terms. If you have any questions or need any help to get the best outcome from your lease, you can call Kelly Cunningham for a free, no obligation conversation on 1300 356 702.