When you move into a commercial property, most leases will be for a set length of time. This allows you to review your situation and determine whether another property will better suit the needs of your business in the future. It’s important to know that a lease renewal is not an obligation. Starting the process does mean you have to sign an agreement with whatever terms are presented or discussed.
In these situations, having the right advice can make all the difference in making sure the next lease suits both sides involved in the renewal. The advice should be tailored to your needs, but comprehensive enough to withstand whatever the other party brings to the table.
What Is A Lease Renewal?
A lease renewal is when the existing terms of a lease are coming to an end, usually at the end of a defined period of time. The purpose of a lease renewal is to determine the terms that will apply for both parties to continue their agreement.
This can only happen if both sides are willing to move forward, so it requires the tenant and the property owner or manager to be present. If one side wishes to go in a different direction there’s no need to start the process.
Even if both parties are willing to continue, a lease renewal process should be started to examine the conditions of the agreement. What may have been suitable in the past might not be now, and this is when the negotiations begin.
Who Can Provide Lease Renewal Advice?
When seeking lease renewal advice, make sure that the people advising you are qualified to do so. This can be shown through qualifications in the field from certified bodies, as well as experience of providing a lease renewal service over the years. This gives you the confidence you need to follow the advice given to you.
You should always check the credibility of any lease renewal service before seeking and acting on any advice. This will give you the best chance of achieving the best outcome from the negotiation.
Why Are Lease Renewals Important?
Lease renewals are important to make sure each party involved in a lease is happy with the terms and conditions. This satisfaction can change over time, as the economy changes, costs grow, and other factors impact what a business is hoping to do or a property owner hopes to gain from a tenant.
A lease renewal allows both sides to present their terms for a new arrangement. It’s unlikely both parties will have the same idea about what the new deal should be, but it’s a good indication of whether an agreement can be reached. This stops complaints or problems arising through the length of the contract.
When Should You Start A Lease Renewal?
For commercial properties, the intention to renew a lease must be made between 6 and 12 months before the contract ends. This gives both sides enough time to negotiate the terms of a new agreement, while making sure there’s enough time for both to find alternative arrangements should a renewal not be agreed. The exact timeframe needed to inform a property owner or manager will normally be stated in the existing lease.
The sooner you decide to renew – and start the negotiation – the more time there is to reach an agreement. It must be completed before the lease ends, as tenants will need to leave the property if no extension or agreement is signed. It is usually not possible to remain in the property during the negotiation.
Negotiating Lease Renewals
When it’s time to begin a lease renewal negotiation, there are a few things you should keep in mind to be successful. By choosing this option, you are showing the building owner or manager you want to remain in the commercial property you are currently in, but this doesn’t mean you are in a weakened negotiating position.
Take the time to prepare for the negotiation, gather the data and resources you’ll need to present your case, and remember that the people on the other side have the same goals as you – but they’re looking at things from a different perspective. This will help you get the most out of the process.
How Should You Approach Lease Renewals?
Before beginning a lease renewal, both parties should have a clear idea of what it is they want the new agreement to be. A flexible approach is the most successful way of making sure the negotiation is successful, but knowing where you won’t compromise is important – as is the understanding this may cause the other party to end the renewal process.
Avoid being defensive or aggressive, as this won’t help you find an understanding with the others involved in the renewal. This is a discussion, and being civilised, polite and understanding is more likely to result in a positive outcome.
Can A Landlord Refuse To Renew A Commercial Lease?
It might seem obvious to you that a landlord, property owner or manager might not want to continue the arrangement you have, but any number of factors can change their plans or situation. While you may want to continue in the property, and a lease negotiation begins, one of the outcomes is that the landlord might refuse to renew your commercial lease.
This might mean they want a price you’re unwilling to pay, or they’re looking for a new business to make use of the space. It could also mean the building needs work done and this can’t happen with tenants inside. While you can try to change their mind, be aware that you may have to look elsewhere.
Seek Lease Renewal Advice
Before entering any lease renewal negotiation, the best plan is to seek advice from an expert. This can help you identify what you’re looking to achieve, where you can compromise, and what kind of proposals may be put forward by those on the other side of the table.
While there are plenty of options available when looking for lease renewal advice, we advise finding someone who is an expert in the area your property is located in. This can give you all the inside information you need to get the best out of the negotiation. Also ensure that the people giving you advice have as much experience dealing with commercial property agreements as possible.
Find Out More About Lease Renewals And How We Can Help
A lease renewal might seem a daunting prospect, but when you view it as a discussion to determine the best course of action for both parties, it becomes a lot easier to manage. All sides will want to maximise their return on the agreement, but the disruption that comes from looking for a new commercial property – or finding a new tenant – can sometimes outweigh the benefits of stacking the terms in your favour.
This is just one of the factors to consider, and our experts at Williams Sillitoe can help either party find what it is that matters most to them in any negotiation. We will make sure you’re fully prepared for what you might be offered and can help you analyse the impact of any new terms. If you’d like to find out more, contact our team today.