Recently, I have been negotiating on behalf of two clients that are in the midst of a lease renewal for commercial space. My clients, the tenants in both cases, had leases that were set to renew at fair market value. This means that the tenants would need to determine the fair market value of their property and successfully negotiate the new rate.
There are at least two problems with this. First, the landlord is likely to have a better handle on what lease rates are in the current market if they have more than one property or more than one tenant. Second, most landlords believe that rent always goes up.
Often times this puts the tenant in a position of weakness when negotiating the lease renewal. Landlords love this!
The Closer – The Tenant’s Agent
In baseball, a closing pitcher is called in at the end of the game to get the final outs and preserve the lead in a game. Hiring an agent to handle the negotiations helps to rebalance the negotiation process and keep the tenant ahead in the negotiations. A tenant’s agent works much like a closing pitcher in baseball, coming in at the right time in the game to make sure that the tenant gets the most fair deal available.
A good commercial agent will know what is going on in the local market and what current market rents are. This negates the landlord’s advantage of having more market knowledge than the tenant.
In situations where rents have actually decreased, a commercial agent can provide additional leverage by showing the tenant alternative space that may be available for a lower lease rate. While the tenant may not want to move, an alternative location may provide significant financial savings that do not justify staying.
The availability of more affordable space can provide a significant bargaining chip with a current landlord to provide a renewal at a significantly lower rent.
What are some questions that you might have regarding hiring an agent to represent you in the negotiation of a lease renewal?