Happy New Year everyone! I hope you enjoyed the holidays and are excited about the prospects of the new year. Like most people, I spent these last few weeks planning the things I hope to accomplish in 2014. Planning ahead is critical to any successful endeavor. If your company’s lease is expiring in the second half of 2014, now is the time to plan ahead, even if you know you want to stay in your current location!
Strategic planning, future needs assessment, market research, site identification, space design, tenant improvement costs, existing market conditions, and potential market concessions are all important to understand to be effective in negotiating both new and renewal leases. By taking the time to complete each step you know exactly what your needs will be and have the time to research your alternatives for a solution. Time and alternatives are critical leverage tools in any lease negotiation. If your plan is to renegotiate lease provisions or to add an addendum to your present lease, being proactive lets the landlord know you are exploring your options and gives you enough time to analyze market alternatives. This allows comparisons for your current landlord to meet your company’s requirements over the next 3-5 years. If the landlord senses you are considering possible alternatives for relocation this provides leverage for your negotiation.
Landlords know that the costs of replacing a tenant are generally much higher than retaining a current tenant. Assuming your company is not in default on the present lease, and generally speaking you’ve been a good neighbor within the building or project, the landlord will have an incentive to entice you to stay. The flip side is waiting until the last minute before your lease expires to address either a move or to negotiate changes to your present lease. Landlords are aware of the time frames necessary to identify and negotiate for a new space. They will know you do not have the time to effectively explore market alternatives or the time to move without significant business interruptions. The landlord now has the negotiating leverage and can dictate terms and conditions more favorable to them.
To be safe, take your current lease expiration date and count back 7 months. That’s the amount of time you will need to ensure you maintain your negotiating leverage, and to consider the tactics needed to help secure the most favorable lease terms. There are at least 20 key points I look for when reviewing a lease. I have also found performing a thorough lease review provides an excellent starting point for developing a winning strategy for negotiation. If the process is done correctly you will end up with a lease that will contribute to your company’s profitability. If done incorrectly it can have a direct negative impact on your bottom line.
If your lease is expiring this year and you would like to have an expert review your lease and discuss possible negotiating strategies, please contact me. I can be reached at email@example.com, or (760) 445-9908. Additionally, visit our website at http://www.bradvisors-sd.com/ for more information.
Thank you and I wish you much success in the new year.