Renewing Your Lease? Don’t Overlook These 3 Critical Steps!
People tend not to take renewals all that seriously. They see it as simple, thinking they can just call the landlord and get their new rate. That way of thinking can cost your firm a lot of money. If you’re looking into renewing your lease, make sure not to overlook these 3 critical steps.
1) The number one thing I see people forget on their renewal is, resetting the base year. After all, you are most likely renegotiating the rent. Let’s use an example. You have 10,000 s.f. and just came off a 5 year lease. The annual pass through over 5 years can be as high as $2/s.f. If you forgot to reset, your firm will now be paying $20,000 more per year.
2) Number 2, read the lease again. Sounds simple, but most people don’t read their lease when they sign it initially, so logic follows that they won’t read it again at the time of renewal. What to look for? Things that are going to be taken away, or loss of rights. For example, let’s say you were paying $100/month for a parking spot. The original lease had a set rate. If you don’t go back and renegotiate your parking spots, you could pay double, or lose them all together. Think such a thing never happens? I’ve been in this business for 35 years, and have seen it happen more times than I can count.
3) Number 3, is to make sure you know the rental rates. Many times, I’ve seen people look at 3 lease rates from 3 landlords, and not realize one is triple net, one is modified gross, and the last one is gross. If you don’t know the difference between those three things, you could be in for a very rude awakening when you get a bill from your landlord for these expenses.