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What do I need to know about renegotiating my commercial lease?

On Behalf of | Dec 30, 2022 | Business Consulting & Advice |

The property you lease will be critical to the success of your business. You need the right place, in the right location, with the right terms and price.

You may occasionally need to renegotiate the commercial lease for your business. Reasons could include:

  • Looking to get out of the lease
  • Adding on to the space you are leasing (e.g., expanding into more of the building owned by the landlord)
  • Negotiating more favorable terms because your business is doing well (or is not doing well)
  • Your landlord is not doing what they promised to do

Here are some of the points that should be part of any negotiations for a revised lease:

The total rental costs

You might feel the proposed rent increase is unfair. Or maybe you need the landlord to reduce the base rent because the energy bills you pay have risen sharply, meaning the overall total is now unaffordable. You could even request a different pricing structure for the new contract that reduces variables and allows for better budgeting.

Future rent increases and the length of the lease

If the landlord insists on a rent increase you consider too high, consider offering to take a longer lease length in exchange for a lower rate. Guaranteeing occupancy for an extended period may entice them into a rate that works better for your business. Both sides can benefit from the increased security of a longer lease as well.

Needed structural improvements

You can once again offer to give the landlord something they want (more rent, more years) in return for improvements to the building, making staying a more attractive option for you.

A relaxation in the terms

Landlords can set strict policies limiting your usage, the hours you can operate from the building and more. Relaxing them could help your business reach its full potential.  Allowing you to sublet the space if needed means you can pass on the financial burden if things do not work out as planned.

We help businesses negotiate better commercial leases. Contact us for a consultation.