WHEN IT’S TIME TO RENEW YOUR LEASE – HOW MUCH TIME IS ENOUGH TIME?
Too often, tenants comfortably ensconced in their office space simply forget about their lease until they get a call from the landlord and receive an offer to renew a few months before their lease expiry date.
This is a landlords dream – they have a “captive tenant” that does not have enough time to move. Tenants in this situation have very little leverage when negotiating the lease and frequently end up with a lease rate that is above the market rate.
Whether you intend to renew your lease or move your office – you need enough time to review the market and be in a position to negotiate a new lease.
The best negotiating tool a tenant has is market intelligence:
– What is the lease rate and operating costs for comparable space in comparable buildings?
– What are other landlords (or your landlord) offering to tenants as an inducement to lease space in their buildings?
– What is the vacancy rate in your building, your market, and in your landlord’s portfolio?
HOW MUCH TIME IS ENOUGH TIME?
Start thinking about your office space options anywhere from six months to a year in advance. The planning stage can take considerably longer than most tenants think.
From the time you sit down with your broker and review the market and office space alternatives to when new office space is ready for occupancy can take several months. If existing facilities can’t be found that work for your company, new construction can take up to twelve months or longer.
After reviewing the market, whether your intention is to renew or move, if landlords know you have several viable options and the time to act on them, you will have increased your negotiating power significantly.