South Florida has entered another phase of frantic activity and it’s very easy to get caught up in it all. Leasing activity is bustling, investment sales are brisk and office developers are moving dirt. We are seeing rents escalate across all submarkets and landlords are tightening up on concessions. Free rent is rapidly becoming obsolete. What happens if your lease expires during this period of the real estate cycle? How do you manage your costs when rents are rising? Your renewal negotiation is more important than ever. Here are three strategies to deploy in our Third Step to Negotiating Your Office Renewal. Click here for Step 1 and Step 2.
The first thing is not to allow the landlord to use time as its leverage. Begin your renewal process early. One of your best weapons on a renewal is the possibility of you relocating to another building. In order to make that threat viable, you need to start your renewal process at least a year prior to expiration. You also need a tenant rep broker who will assist with this strategy. Your landlord knows exactly how long it takes to construct a space and negotiate a lease. If you contact them 60 days prior to your expiration, you have lost the negotiation before you ever picked up the phone. Even if you do move, if you have to stay in your space past lease expiration, your landlord can charge you 200% rent for each month. Therefore, it is important that you give yourself plenty of time to negotiate your renewal.
The second strategy is to have a solid Plan B. By exploring comparable properties, a tenant can better understand the market variables. Have a space that you like, that would work for your office. If you are going to threaten to move, you need to know what your options are down to pricing and terms. Even though moving is a pain, occasionally a tenant can find a better deal or a better office space and that deal could make more sense than staying put.
Final strategy is just that. Renewing an office lease is part strategy and part execution. You need a strategic partner who keeps the process moving. A competent tenant broker (like WorkSpace Realty) leverages its expertise in lease negotiations and knowledge of recent lease transactions in your area. We work alongside our clients to help them gain an understanding of the current market, so they are making informed decisions about their office lease every step of the way.
During this uptick of the real estate cycle, you need an expert who has the right relationships to guide you through the process. We are that expert so give us a call today to discuss your unique situation.