Renegotiate Your Lease: Now’s the Time

If you negotiated your lease during the height of the real estate boom, you may be having a hard time keeping up with rental payments now that business has slowed. But while new global economic conditions are creeping up on all business owners like the grim reaper, the savvy business owner knows that it’s essential to aggressively make the changes necessary to survive. And remember, commercial landlords are business owners too, so they’re keenly aware that tenantless buildings spell big trouble for them. So rather than vacate your space – and possibly incur steep fees for doing so – sit down with your landlord and work toward a new lease with reduced payments. If you’ve got a smart landlord, they’ll realize that helping you survive is in their long-term interest.  

Whether you’re a landlord or a tenant, chances are you negotiated long and hard to get the best deal on your current lease or leases. As a tenant, you had a reasonable expectation of how much your business would prosper and grow, and brought that understanding to the table. And, of course, landlords, too, set rent and other terms based on expected trends. Now, many of those assumptions have been dashed, as businesses see dropping profits and landlords face increasing vacancies. In short, as in so many areas of modern commerce, it’s time to renegotiate the lease. The key to a successful renegotiation is early and candid communication between landlords and tenants. Tenants who wait too long to approach the landlord may be so over their heads in debt that they’re forced to ask for unreasonable concessions – an earlier request might have resulted in both sides agreeing to a more modest restructuring. And landlords should not wait until a tenant whose business is obviously suffering is ready to throw in the towel. Talk to your tenants to find out how healthy their business is, and whether a significant, but not breathtaking, reduction to the rent might make it easier for them to stay open. 

I negotiate millions of dollars worth of commercial leases every year and I would be happy to guide you through this process.  Brian Huddleston   

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