Leasing managers often lament that they wish all tenants renewed their leases as easily as some tenants. One leasing manager chuckled as he described the process of a recent lease term renewal. He met with the tenant at a local coffee shop, and after a brief discourse the tenant shrugged, turned white, and quietly accepted the manager’s initial renewal proposal even though the rent increase was 25% and there were no other changes to the lease! The manager was surprised that the tenant didn't attempt to negotiate even one element of the tenancy!
Let's think about what happened here.
The leasing manager confided that he had deliberately inflated the proposed rent value to leave himself some room for negotiation. The tenant’s reluctance to negotiate meant he overpaid in rent by over $25,000 during the next 5 years of the term! The tenant made no attempt to introduce any new elements into the lease - even though he had no further options to renew. Assuming this tenant actually did care about the terms and conditions of his lease, he either didn't know that they are negotiable, didn't know how to approach the renewal or was daunted by the task and intimidated by the leasing manager. This tenant appeared to have absolutely no idea what he was doing with respect to his lease and, unfortunately, he paid a heavy price!
When your lease term comes up for renewal you must know that in almost every case:
1. the rent is negotiable
2. there is room to amend lease terms and conditions such as additional renewal options and covenant
3. the landlord expects the tenant to negotiate the terms and conditions
4. you need to stand up to your leasing manager like a pro… or hire one
Always approach a lease term renewal knowing and understanding:
1. what your lease says with respect to the renewal
2. what the current local commercial realty market is like
3. what your leverage position(s) are and how to use them
4. how to deal with difficult people
If you are not confident about these key leasing issues, or if you would simply prefer to focus your energy and effort on your practice and your patients, you must retain an experienced professional advocate and advisor to complete the renewal negotiation on your behalf. Don’t send a dental pro where a lease pro is needed. The savings generated by a properly executed renewal negotiation will more than offset the professional fees.