5 Things To Do Before You Sign A Lease Extension
It dawns on your one morning on the elevator ride to your office: you’ve got exactly a year before your lease expires. As your mind remembers all the great times you’ve had in this office, it simultaneously starts racing about the future.
When it comes to whether you should sign a lease extension or not, ask yourself these three basic questions:
- Do I want to relocate?
- Do I plan to outgrow this space soon?
- Do I expect a downsizing to happen?
If you answered “no” to all these questions, you might want to sign a lease extension. And once you come to that conclusion, there’s five things you should do in preparation.
Start Your Evaluation Early
You don’t want to find yourself in a panic and frantically sign a lease extension out of desperation. Instead, start evaluating the space 12 months prior to the lease expiration. This gives you plenty of time to know if you want to renew. And if not, find another office space to move into at the conclusion of your lease.
If you approach your landlord regarding an extension too late, you’ll lose all leverage in the negotiation process. But if you go into negotiations with a clear understanding of the market and your overall objectives, you hold the cards in your hand.
Hire a Commercial Real Estate Broker
Tenants often forego a broker’s assistance when it comes to lease renewals. Perhaps you think that your familiarity with the space and landlords gives you plenty of experience. But don’t write off a broker’s help quite yet.
Generally, the landlord pays for the costs of tenant brokers, even in the case of a renewal. With that kind of deal, who wouldn’t want assistance? You can get an experienced real estate professional to help you understand market trends, negotiation options and other office spaces that may work even better for your company.
Research Other Available Properties
Investigating the market is one of the most important things you can do. Although a broker can provide powerful insight, you can learn about market trends even if you decide to take on this responsibility yourself.
Even if you have no intentions of moving, evaluate other properties. This will give you market knowledge for what others offer, negotiation opportunities and the current fair market value.
Leverage Your Insider Knowledge
Since you’ve spent time in the office space, you have insider knowledge of the strengths and weaknesses. You have greater leverage than you had the first time you signed the lease, simply because you know more. Knowledge is power.
What things do you wish you negotiated into the agreement the first time? Do certain things in the building bother you? Write it down and bring it up during negotiations.
Engage in an Amicable Negotiation
Now you can go into the negotiation process with market insights and insider knowledge about the building. Approach this time in a friendly manner, because landlords will make greater concessions for great tenants.
Ask for more than you really want. It will give you room to negotiate. And if you need help negotiating the best deal, don’t shy away from the opportunity to work with a good tenant broker. They’ll help you every step of the way, from the beginning evaluation to the time you officially sign a lease extension.