Is your lease for office space coming up for renewal? If you allow it to renew under the same terms as in the original contract, you could be missing an opportunity to get a better deal without having to move.
The How – Do Your Homework
Your lease is one of the biggest investments in your practice, totaling $12,000 or more per year. Most of us shop around for significant purchases. We look for the best deal and make sure we are not needlessly paying more for a new laptop or other significant purchase than we might elsewhere.
Take this same approach when it comes to renewing your lease by doing a bit of homework. Drive around the vicinity of your office and write down phone numbers of offices that have rental signs posted. Call the numbers and find out how much they are asking per foot for office space roughly the size of yours.
This will give you a sense of the market and give you an idea of whether the price your landlord is quoting you is consistent with, above, or below the market.
The When – Consider Renewing Early
Don’t wait until just before the lease expires to have a discussion with the landlord to renegotiate it. This can leave you “over a barrel,” with little or no leverage. Depending on the terms you originally agreed to, your landlord may need to give you just 30-days notice before you have to move out, unless you renegotiate a lease, paying a premium for rent.
Most leases have a “window” by which you have to give notice (usually 30 or 60 days) of your intent to renew. You can negotiate during this time period, although it is advisable to start the process earlier, so that you have time to explore other options with other landlords.
Actually, the best time to negotiate a renewal is when you negotiate the lease in the first place. That is, as you negotiate a lease (or even a renewal) write in an option to renew the lease in the future at a predetermined rate (your attorney can help you with the language).
The What – You Can Get Improvements
Negotiating a lease extension is not simply about determining the new rent. It is an opportunity for you to get some improvements in the space and in the terms of your lease. For example, you can negotiate the following:
- Having the office painted
- A limit (or cap) on future Common Area Maintenance (CAM) charges
- Access to the space during times the building may be closed (e.g., evenings and weekends)
- The ability to sublease your space
- New carpeting
- Physical improvements in the space (e.g., redesigning a waiting room or business office)
- The length or term of the new lease
- The terms of future renewals
Overall, you need to be able to speak from an informed position, understanding the market, and what you want to include in the discussion. Negotiating from this position, you can avoid the costs and inconvenience of a move, while staying in an office you like.