Ten Negotiation Tips for Tenants when Renewing Your Office Lease

by CoyDavidson on December 10, 2009

When your office lease comes up for renewal the Landlord can have an inherent advantage if you do not go about the process properly.

  • Landlords know on average an office tenant will renew his lease approximately 70% of the time and it typically requires some compelling reasons for a tenant to relocate.
  • They also recognize the cost and disruption to your business that is required to relocate your company.
  • The Landlord conducts lease negotiations almost on a daily basis, whereby the tenant is typically only in the market every 3-10 years.

So here are a few guidelines:

  1. Hire a tenant representation broker. Their mere presence in the negotiation will enhance your position. An effective tenant representation specialist does this everyday and knows how to strategically position the negotiations on your behalf.
  2. No matter what the market conditions are it is absolutely critical you evaluate options in the marketplace and introduce competition for your tenancy into the negotiation, even if you have no intention to relocate.
  3. Start Early: you must allow enough time to evaluate the market, negotiate the transaction and relocate should you not strike an acceptable deal. In addition the Landlord must perceive you have time to relocate and build out an alternative space prior to your lease expiration.
  4. Always have the Landlord make the first proposal and reveal his position first.
  5. Never accept the first proposal. Ask for more than you can get and as a rule of thumb, your first counter should be at least an equal distance on the other side of the objection as the Landlord’s initial proposal.
  6. Remain un-emotional.
  7. Don’t put any economic value or goodwill in your previous tenure in the building. Just because you have been there for 15 years does not mean you will get a better deal.
  8. Only keep key executive personnel “in the know” as to the status of the negotiation.
  9. Don’t talk directly to the building leasing agent or Landlord and limit or harm your tenant rep’s negotiation strategy.
  10. You should utilize a real estate lawyer to review the lease document or lease amendment but do not rely on your lawyer to negotiate business terms or your broker to negotiate legal clauses. The best case scenario is for the broker and attorney to work together.

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