When to seek renewal of commercial lease?

Altbiz

Hi all,
Our lease will expire in 2 years from now and we're trying to decide when would be best to approach the landlord about an extension. We're currently paying what's probably quite a bit under current market rates, so we're worried about a massive increase, and aren't sure whether it's better to address a renewal now or closer to the time.

A few relevant points;

• The unit has been empty quite a bit over the past decade or so, with many previous companies not lasting there for very long.
• The LL would know that the unit is important to us, however it's not critical and could in fact be to our advantage to move elsewhere, and this could be explained clearly enough to the LL. For ease of operation we'd prefer to stay put though.
• We did up the place and it's a lot more presentable looking now than it was before (probably to our current disadvantage!)
• We have a good relationship with the LL, he's friendly and approachable and afaik also owns several residential properties. We're up to date on rent/rates etc and communication is good around any issues relating to the unit.
• LL did suggest a lease extension a couple of years back (should have jumped on it then)

Are there any options that we may not be aware of - for example I was thinking that if the LL seeks a massive increase, we could agree to upwardly scaled payments over time, so that they're getting increasing returns while we're not getting hit with an immediate big jump in rent.

Any advice much appreciated.

Graniteville

The most important question is what is the length of the lease you currently have?

If its 5 years or more you have specific rights.

If its under 5 years it's like effectively negotiating again

Gloomtastic!

Next time the LL calls round, have a pile of premises for rent/sale brochures in your office where he might see them. Mention that you’re just looking ahead. Then leave it to him to make the next move. He knows you’re a very good tenant and won’t want to lose you.

Have you thought about buying the premises? He might be open to offers.

Altbiz

Hi all,
Thanks very much for the replies. The lease is indeed 4yrs and 9months.

We wouldn't have the resources to buy the premises unfortunately, and he doesn't call around very often and tends to just pop in if his is passing, so there wouldn't be much opportunity to indirectly get the message across.

At the moment we're really just wondering when is the best time to approach him about a renewal - is it to our advantage to bring it up with him now, or should we wait closer to the expiry of the lease?

Thanks again

Gloomtastic!

No better time than the present. If negotiations fail then you have 2 years to find suitable premises to your liking as opposed to rushing into some agreement because you have to move out next month!

It would be better if he came to you but you could call him and say you're just starting to look about for premises and would he have any problems giving you a good reference to a couple of agents you're talking to? Mention you may be interested in staying put for another x years if you can keep to the same terms as you currently have. *This is the important bit* Then just stop talking and no matter how long the pause, do not say anything again until he speaks. Chances are, if you are the good tenant you say you are, he'll agree to it there and then. It's a tried a tested sales trick that I've seen work dozens of times.

Good luck, let us know how you get on!

Altbiz

Gloomtastic! wrote: »

No better time than the present. If negotiations fail then you have 2 years to find suitable premises to your liking as opposed to rushing into some agreement because you have to move out next month!

It would be better if he came to you but you could call him and say you're just starting to look about for premises and would he have any problems giving you a good reference to a couple of agents you're talking to? Mention you may be interested in staying put for another x years if you can keep to the same terms as you currently have. *This is the important bit* Then just stop talking and no matter how long the pause, do not say anything again until he speaks. Chances are, if you are the good tenant you say you are, he'll agree to it there and then. It's a tried a tested sales trick that I've seen work dozens of times.

Good luck, let us know how you get on!

Hah, these are the tricks I'd never think of. Will keep this in mind thanks!