You are roughly 6 months out from the completion of your lease term and your landlord has contacted you regarding a lease renewal. Sound familiar? It is a great location, the space fits your businesses needs, and it would be a hassle to move. So you inform the landlord you’re renewing and they begin to draw up new lease docs. Sounds easy enough, right? Here’s three reasons to hit the pause button and reach out to a commercial real estate broker first.
- The market has changed. Whether it has been three years or ten years since you initially signed a lease, chances are a lot has changed in the real estate industry. Most notably, rental rentals have probably increased and the landlord is asking to resign you at a “market rate.” This increase in rental rate could be upwards of 20% more than what you are paying now. For instance, if your rent is $5,000 per month, a 20% increase would mean an extra $1,000 in rent each month. While an adjustment is appropriate, how large that adjustment is can be negotiated. At O’Donnell Commercial, we help businesses renew their leases by negotiating the escalation in rent.
- You’re busy running your business. While you may want to handle the negotiating yourself, a lot goes into pulling comps and market reports to justify your renewal requests. And chances are you are probably busy with the normal day to day needs of your business. Our firm subscribes to numerous commercial real estate listing services that help us to efficiently analyze and present comparable properties and transactions. Plus, we’ll handle the negotiations for things that may not even be presented by the landlord. For instance, we’ll request rent abatement for free rent, and tenant improvement money to repaint the space, change the carpet in your office, or make any other necessary changes to the space.
- Our services are free! Just like in the sale of a home when the homeowner pays the brokerage commissions, a landlord pays commissions on a lease renewal. In fact most building owners include a commission line in their proforma knowing that they will pay commissions on leases and lease renewals. In the rare case that a landlord doesn’t have a commission built into the transaction, O’Donnell Commercial will work with all parties to determine next steps.
- Bonus: perhaps you’re ready to renew your lease, but just want to see what else is on the market. O’Donnell Commercial can show you reports and organize showings so that you can be sure you’re making the best decision for your business.
If you’re in the last year of your lease, we encourage you to reach out to our firm at least nine months before the conclusion of your lease term. Most landlords request a minimum of six months notice as to whether you will be renewing or not, so the additional three months will give us time to identify spaces and start the negotiations. We look forward to working with you on your office, medical, industrial, retail, or flex lease renewal throughout the Chicagoland area.