Why engage in a lease renegotiation, what is it?
- A Lease Renegotiation is not a lease renewal. You do not need to wait until the end of your current lease term to renegotiate your present lease terms.
- A Lease Renegotiation is a negotiation of the terms and conditions of your current lease to achieve terms more favorable to you starting now.
What are some of the potential benefits to me from a successful Commercial Lease Renegotiation?
- Reduce your costs through rent reduction.
- Reduce your contribution to common area or triple net expenses.
- Have your landlord contribute to or make capital or cosmetic improvements to your premises.
- Some favorable non-monetary advantages to you may be:
- The reduction or elimination of the securitization of your lease.
- The reduction or elimination of the guarantee of your lease.
- Increase the length of your present lease term.
- Increase the length or number of your lease option periods.
- Reduce the remaining time of your lease term.
- Increase or decrease the size of your leased premises.
- Obtain an option or right of first refusal on space contingent or near to your premises in anticipation of possible future expansion.
- Have terms that are more favorable to ease and facilitate the possible future sale of your business and assignment of your lease to a potential buyer.
Who is eligible for a Lease Renegotiation?
You are, if you have a current Commercial Real Estate Lease for any type of Commercial Real Estate.
How do I know if my lease qualifies for lease renegotiation?
There are no qualifications, except for your willingness to engage my Professional Commercial Lease Renegotiation Service in a process designed to result in advantages to you that your current lease presently does not offer.
How do you know you are ready for a Lease Renegotiation?
Are you interested in achieving more favorable lease terms for your business to continue and to succeed at your present location? If yes, you are ready!
Why engage in a Lease Renegotiation now?
- The real estate market and the economic climate have changed, in some cases radically, from when your current lease terms were agreed to.
- The time to engage in a lease renegotiation has not been better in decades.
- The time is now, before there are any indications of an upswing in market conditions. A landlord’s motivation will diminish with the perceived or actual strengthening of economic and market conditions.
Why will my landlord renegotiate my lease? As your representative, there are a variety factors I will have your landlord seriously consider, such as:
Want to avoid an unwanted vacancy?
Landlords are hesitant to risk an extended vacancy period by allowing your premise to become vacant if you move or fail. In this market, it’s in your landlord’s best interest to work with us to keep you as a tenant.
What about a tenant’s decreased sales?
Are you now experiencing and anticipate experiencing over an unpredictable period a decrease in sales and profit? These conditions are now commonplace and can make it difficult, or even impossible, for a tenant to continue paying rent at levels that were negotiated during a more robust economy.
Is there a decrease in traffic?
This is an especially critical factor for retail tenants or if your business depends upon the “billboard effect” from your location. If the amount of traffic in your center or neighborhood has experienced a noticeable decrease, then the value of your premises has decreased. Adjustments to your lease should be made accordingly.
Are there growing vacancies in your landlord’s property or the surrounding neighborhood?
An increase in vacancies in your landlord’s property or surrounding neighborhood equates to a decrease in the value of your location. Especially in a retail environment, as vacancies increase, and depending upon which tenants vacate, the drawing power of a previously strong tenant mix may diminish the value of your premises. A natural consequence of increased vacancies is the simple principal of Supply & Demand, which dictates a decrease in value with an increase in vacancies. Landlords must now reduce rents and other economic terms of a lease in order to draw the attention of the dwindling number of viable tenants now looking in the market.
Is the property in decline:
As the economy becomes more “challenging” a landlord’s ability to afford a previously higher level of maintenance and repair may become equally “challenging.” If that occurs, it is a perfect justification for renegotiation of your current lease terms.
Are there changes in the real estate market?
Highly likely! Once a review of comparable property has been completed it will become immediately apparent if rental rates and other economic terms have declined. If a decline has occurred, this is another perfect justification for renegotiation of your current lease. Typically I recommend presenting your landlord with evidence of the local rental rate reductions. This also indirectly serves to put your landlord on notice that there are other viable alternatives in the marketplace to you remaining as a tenant.
What’s an additional, perhaps unexpected outcome, I might produce for you?
- Relocation as a Viable Option: Part of my Professional Commercial Lease Renegotiation Service may include determining if alternative leasing opportunities in your local market are available. It may just turn out that I can produce a better deal for you at a new location, with a new landlord. The result may be that after considering all the costs and factors involved in relocating that your moving is your most favorable option.
- Once the position of your Landlord is revealed, the negotiations are structured to imply to your Landlord that you have viable options as a Tenant that make economic sense, other than remaining at your present location with your current lease.
- At some point in the negotiations we may determine that even if you have no inclination to relocate, it is essential to identify relocation opportunities that may be viable alternatives and to then provide your Landlord with evidence of these competing properties, while we act “as if” you might relocate.
- It may just be that your Landlord and/or the Landlord’s Agent may just not be aware of the surrounding market conditions and simply need to be better informed and educated to get on board with our Professional Commercial Lease Renegotiation strategy.
- If ultimately relocation is in your best interests, a hard evaluation of relocation opportunities in your market will be conducted. If a successful relocation is conducted we will then address strategies to successfully get out of your current lease obligation.
How much can you save me through renegotiating my lease?
- That can’t be determined without fully engaging in the process.
- At the very least we will seek to achieve renegotiated terms and conditions on par with present market conditions, verses when your current lease commenced.
- The best renegotiated terms and conditions will enable your business to be even more profitable and more likely to succeed at your current location.
Why Professional Representation? I can do it myself!
- I bring decades of experience, with a valuable range of skills, in pursuing your interests.
- By hiring a Professional, the landlord will perceive you as sophisticated and serious about exploring all your options. This alone will immediately increase our negotiating leverage.
- The old saying that “a lawyer who represents himself has a fool for a client” can also apply to tenants who represent themselves in Commercial Lease Renegotiations.
- Remember: All lease terms are open for renegotiation, making the Commercial Lease Renegotiation process potentially as complex as the original lease negotiations. Once begun, Commercial Lease Renegotiation is a time consuming project. To achieve the best results requires constant attention to detail until the Renegotiated Lease is signed. That is what I provide.
See you there,
Steven Smith, President
Steven Smith, Inc.