Early Lease Renewal: A win-win-win
Friday, January 23rd, 2009
In the current economic client, it’s a fine opportunity for all parties to a lease transaction to explore an early renewal of a lease:
The landlord can address near-term lease rollover and help stabilize his or her building, creating value immediately. Look over your rent rolls and approach tenants now to firm up your tenancy. Things won’t be rebounding dramatically over the next 12 months so you don’t stand to gain by waiting.
The tenant can often secure very attractive concessions in the form of tenant improvement dollars, a lower rent, or even rent abatement. The tenant’s knee jerk reaction is to keep lease term down to keep their options open for the future. This may be the right move, but if you don’t expect to grow or shrink, take advantage of this very tenant friendly market.
The broker can earn a fee for advising either party in this climate where the volume of sales is down dramatically. If you’re not already, approach any tenant with less than two years of lease term remaining about the prospect of politely approaching their landlord to negotiate an early renewal. This is a pipeline of income that you may be missing out on.
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