Lease Renewal Options
Next, your broker will want to look at your lease renewal options.
Most commercial leases include one.
It should state how long you have to exercise this right before you lose it as well as what the term for the renewal shall be.
Make sure you get a complimentary lease review long before it's time to renew. This way, your tenant rep will have plenty of time to use the information in your current lease to work on negotiating a better one for you.
Your lease might be full of landlord-friendly clauses you never knew you had. Sometimes, only an expert will be able to figure which provisions overly favor your landlord.
This is yet another reason to hire a tenant rep.
The Importance of Arbitration Clauses
When your tenant rep does his lease review, he'll make sure you have an arbitration clause in your lease. If you don't have one, it could be challenging to agree on a reasonable rental rate come renewal time.
If you have a landlord who's very difficult to work with, this is particularly true.
Check to See If You Have A Renewal Option
Sometimes you don't have the right to renew.
Your landlord will check the sections of your lease entitled "OPTION TO EXTEND" or "RIGHT TO RENEW" to see if you have this right in your current contract.
This is also where he'll find out how much notice you have to give if you want to exercise your right. It could be three, six, or nine months.
Or, something entirely different.
There's nothing set in stone about how much notice you have to give. The lease renewal option is whatever you and your landlord say it is.
If you exercise your option, only two things about your lease will change. These are how many years the contract will be for and what the new rent's going to be.
When your tenant rep checks your lease, he'll be looking to make sure the date you have to renew by is clear.
Because if it isn't, you could miss your opportunity to renew. This could cause a world of problems for you.
Renewals for Only Part of The Space
Most leases state that the renewal applies to the "premises," which means the entire office area.
However, what if you think at some indefinite date in the future, you're going to need less space?
You can try to have your tenant rep negotiate a lease that allows you the freedom to do this. He can write a clause into your contract that your renewal can be for "all or part" of the premises. It could include a certain percentage of the space you have to take—say 80%.
Your tenant rep and your landlord can hammer out the details, including who's going to pay for putting new walls up to divide up the old space.
Automatic Lease Renewals
Although rare, you can try to have your tenant rep negotiate for an automatic lease renewal. This means if you have a five-year lease with an automatic renewal, your contract will automatically renew at the five-year mark unless you tell your landlord otherwise.
This locks in your current rental rate.