Leverage Is The Key To Successful Renewal

You may be surprised to leam that the best time to negotiate renewal terms is before you agree to move into the building. That's because landlords are much more responsive to prospective tenants than to those they already have in tow. But even if your renewal clause is less than advantageous, you probably have far more opportunities than you realize. The key is leverage, and there are a number of ways to develop it.

Staying Put Doesn't Mean Giving In

Here's a typical scenario: Your lease is set to expire in the next 18 months. You're satisfied with the space, and you're not interested in other buildings, but the terms for renewal are either poorly defined or not especially favorable. You assume you're at the mercy of the landlord, and you're probably wrong.

Before you sign on the dotted line, there are a number of things to do.

Explore Alternatives

To maximize your clout, begin as early as possible to explore alternatives, which will allow time for a rational analysis of all possibilities, including other locations.


Review Your Lease

Review your lease carefully, preferably with a professional, to determine exactly what your renewal options are; remember, everything's negotiable.


Discuss Your Renewal

At least a year before the notice period for exercising your renewal option, notify the landlord of the key terms and requirements to be addressed in a renewal proposal.

Compare the Offers

After the landlord spells out the renewal base rent, tenant improvement allowance, adjustment to escalation base year, and other key issues, compare this offer with those of comparable properties.

Hold Your Ground

Remember that the first offer is only the beginning. If you hold your ground, chances are the final offer will be far better than you might expect.


If the market is soft (as it is today) and you're a financially-strong tenant, stand fast. If the landlord is unwilling to meet your demands, others will, and it may be worth your while to consider a change of scenery. A tight market, however, will hurt most tenants whose renewal options are less than ironclad. Consequently, if you're not fully protected now, make sure you are the next time around.


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