If you do not take these simple steps, Right Now, I can almost guarantee that you will lose money on your next lease negotiation. The reason is simple, when negotiating a new lease or extending a current lease, the single most important asset you have as a tenant is TIME.
Time wasted or spent foolishly is how we typically define procrastination in life. When it comes to lease negotiations, if you are out of time, you are also out of money. The reasons are simple.
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- You may not be able to find all potential properties in time to negotiate on the one that is the very best for your business.
- Your current landlord or future landlord will have leverage on you, knowing you must make a decision or be without a space. Depending on your company size and your space needs, this could be a major stress.
- You might not have time to convert an ideal space or property to your needs, and a great space will be removed from your wish list.
There are many more reasons TIME is money in commercial real estate. It can be a major stress for even the most seasoned of CRE veterans. One of the elements in life that is associated with all sorts of stresses in life, and not just commercial real estate, is the feat of the unknown. Think about it for a moment. If you receive an unexpected phone call late at night, does a little bit of the “fear of the unknown” enter your mind? How about when you are between jobs, or moving, or meeting new people? Fear of the unknown can be a major contributor to our fears.
So when it comes to commercial real estate, and lease negotiation specifically, we’ve put together a handy document to outline the timeline of expectations for you and your business. This will hopefully take some of the fear of the unknown off the table for you. You can at least see what the expectations on you will be for getting that next lease finalized and your business moved in. You can also use this checklist as you work your way through the lease search and negotiations and keep track of where you are in the process.
One thing that may grab your attention right away is that you may need 6 months or more of TIME
Whether you signed a lease just recently or a couple years ago, you should do the following, Right Now, so you can use TIME to YOUR advantage.
- Pull out your lease and look for the expiration date. Put this date in your calendar right now, if you haven’t already.
- Look for a notice clause in your lease. This will be language that says you must tell your current landlord of your intent to stay or go at the end of your lease term. This may be 6 months or more before your lease ends. Put this date in your calendar as well.
- If you must provide notice to your landlord, contact a commercial real estate broker like David Haug at Lighthouse CRE to provide you with a market canvass report 1-2 months before you must provide notice and at least 6 months before your lease ends.
A market canvass report will show you what spaces are currently available in your marketplace, what the current rates are for space like yours and how they compare to your current lease rate and terms. This is an essential tool to help you determine exactly how your space needs compare to the marketplace and will arm you with the information you need to determine whether you stay or go, and what your expectations should be for rent. These are all essential ingredients to budgeting properly and making the best strategic decision for you and your company.
Bonuses that TIME will provide you when negotiating a new lease include…
- The potential for free rent (rent abatement) at either your new location or even your existing location. You save your current landlord lots of money when you stay, they save on marketing costs, etc.
- The potential to have your moving costs paid for
- The potential for better parking solutions
- The potential for more tenant specific upgrades just for you
The more time you have the stronger your leverage in negotiations. So, kick procrastination out of your lease negotiation life and take the three action steps outlined above and download your Lighthouse Lease Timeline Checklist here.