Is your office space lease up for renewal? If so, you most likely have a Renewal Deadline to provide your Landlord if you will be renewing your lease. Should you renew your lease? Or relocate your office? Now that is the question. Before you make your decision, avoid these three traps if you want to reduce your financial risk, maximize your monthly rent and providing the most long term flexibility for your company.
1) Procrastinating Before Acting
Leverage time to work for you, not against you. Don’t give up your rights for negotiating. Allow plenty of time to work things out before your lease date is up. A good rule to remember – the amount of time you need is correlated to your size of office space. If you occupy less than 2,500 rentable square feet, four months before your lease ends is an ideal time frame. Allowing enough time prior to deciding to renew your lease or relocate gives you time to assess the market and spend time negotiating deal points that are most important to the success of your business.
Our team recently worked with a Tenant who had leased over 3,500 rentable square feet of office space. They started their search during November with a deadline to move by the beginning of tax season, however, their progress was slowed down due to the holiday season and busy contractors. In the end, the Tenant did not move into their space until the middle of tax season. Being aware of your busy season and holidays are important to remember when planning your office space search.
2) Failing to Assess the Market
Keep in mind that it is easier and less expensive for a Landlord to keep a current Tenant rather then going through the timely process of marketing the space, identifying a Tenant and negotiating a lease. This works in your favor and helps to give you the upper hand as the Tenant. However, if the Landlord knows you are entertaining other options in the market, he is likely to be more aggressive in the renewal proposal.
Assessing the current market is key to ensuring you the best deal available. Competing Landlords in the area could deliver the floor plan you need but in a more efficient space, decreasing your office size and potentially your rent. It’s important to know your options before you decide which route – to renew or to move – is the best fit for your company.
3) Accepting Your Renewal As Is
The Broker representing the Landlord has a fiduciary relationship representing the best interest of the Landlord. Keep in the mind, however, that the renewal will favor the Landlord and his cash flow, not yours.
For example, you have been leasing your office space for five years and while the floor plan still works well for your team, you would like the carpet cleaned, interior repainted or a reserved parking space. Each of these items can be presented and negotiated as part of the renewal. Office Space Brokers recently worked with a law firm who loved their office and location but there were inefficiencies in the floor plan and the break room desperately needed cleaned. The Landlord knew our team was reviewing competing nearby offices and this motivated him to do what he could to keep the Tenant, giving the law firm a wonderful negotiation on their five-year renewal. Don’t make the mistake of quickly signing your lease renewal to get it off your to do list before contacting a professional like Office Space Brokers to help negotiate the terms to your favor.