Thinking About Renewing Your Commercial Lease? Here’s What to Know
At the end of a commercial lease, there are two options to explore: to renew or not. This simple question is more complicated than many people think. It’s not just a matter of whether you could afford to continue or whether renewing would be convenient, comfortable, and fun and where you want to spend the next few years for your business.
So, when is the best time to renew your lease, anyway?
In the Middle of the Lease Term
Yes, you can renew a contract during the lease. You only need to negotiate with the landlord or property manager. One of the reasons some people do this is when there’s an impending building sale. A lot of owners try to stabilize their rent before they sell the properties.
It doesn’t guarantee a lower rent, but it can lock in your current rent for a longer period. Who knows? You might even get to negotiate a few months of free or partially abated rent in place of a lease renewal.
Another reason is when there’s a major new vacancy. In this case, you’ll be in a solid position to negotiate your lease renewal. Finally, market changes could also make your landlord’s position weaker, which is an excellent time to renew the lease and get a reasonable rate.
Close to the Drop-End Date
You can think of renewing your lease close to the drop-end date. It means you will put off a decision until the last minute. You might think it is a bad idea, but there are advantages as well. For one, this can weaken your landlord since they will be worried about losing you as a tenant, but they don’t have enough time to replace you right away.
Still, you need to remember that this is a considerable risk because your landlord may choose not to renew the space assigned to you. With that, you could end up with insufficient time to move your place of business to a new location.
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Renew Your Lease at the Right Time
Your commercial lease is important; otherwise, you could end up with no place to put up your business. As a result, it will affect your operations and sales. Knowing the best times to renew a lease is essential. You also need to consider the changing nature of commercial real estate when you’re renegotiating your lease. This is why it is wise to begin negotiating on your lease approximately 9-6 months in advance so that you will have plenty of time before the expiration. First, if the initial negotiation doesn’t work out, you can continue with the deal until you and the landlord find a middle ground. Secondly,, it will give you enough time to secure another location if you and your landlord are unable to come to an agreement.
How Can We Help You?
If you’re interested in either buying, selling, or leasing commercial real estate, you’re in the right place. Saman Saba is a commercial REALTOR® and a real estate attorney whose ultimate goal is to empower real estate sellers, buyers, and lessees to make sound and informed decisions about their most valuable assets. Reach out today to learn more about your options and what you can do regarding your commercial property.
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