We’ve said it before, but finding the right commercial space in Maryland can make you feel like Goldilocks. This location is too small. This location is too big. This location is too noisy. This location is too quiet (will anyone be able to find me?). When you find that space that is “just right,” it can feel like a weight is lifted from your shoulders…until the time comes to renew your lease or find a new location. But you don’t want to leave and start the search all over again, unless a family of bears suddenly shows up at your front door. So, that settles it – lease renewal. But now what?
When the time comes to renew your commercial real estate lease, it pays to have an experienced broker in your corner. No matter how nice your landlord or property manager may seem, he is only looking out for his own economic interests. So, who is looking out for you? That’s where your commercial real estate broker comes in. But not all brokers are created equal. You need to find a broker who specializes in lease renewal. After all, renewing a commercial lease is a complicated process. It requires a very particular set of skills to negotiate fair and equitable terms to ensure your business continues to thrive.
We know what you’re thinking. How much will a lease renewal broker cost me? Now, for more good news. In most cases, hiring a commercial real estate broker to negotiate the terms of your new lease won’t cost you anything. Almost every lease deal has a paid commission built into it, funded by rental dollars. So, when you don’t use a tenant rep broker, you’re not saving any money, but you are giving up considerable leverage. And in those rare occasions when commission is not built into the lease deal, it can still save you quite a bit of money to employ a broker to negotiate more favorable terms for your renewal.
Lease Renewal Process
One of the questions we hear quite often is…when should I begin the lease renewal process? And the general rule of thumb is that business owners should really begin to start reviewing options about a year before the lease expires. This is the perfect time to contact a commercial real estate broker to strategize. While brokers are no stranger to last-minute lease renewals, thinking ahead can payoff.
- Start thinking about your facility needs and business goals. Does your current space meet all of your needs? Starting the renewal process early gives you plenty of time to really think through your needs and evaluate your current space. Does it check all the boxes? Budget, size, location? Is anything missing?
- Look at other available properties. Take some time to evaluate properties that are comparable to your current location, as well as some aspirational spaces, and request a few lease proposals. Even though you plan to renew at your current location, it can be helpful to know what’s out there. This information can be invaluable during negotiations to ensure you get a favorable deal.
- Request a lease renewal proposal. After evaluating your needs and a few other spaces, it is time to request a lease renewal proposal from your current landlord or property manager.
- Negotiate and execute the lease renewal agreement. Now is the time when you really want to have a lease renewal broker on your team. A qualified local broker knows the landlords, the properties, the market conditions, the competing dynamics that play a role in discussions, opportunity costs, and the many additional factors that may affect the terms of your new lease.
Even More Benefits
What is more important to you as a business owner than Time and Money? Probably very little. Well, working with an experienced broker can help you save both. For starters, lease renewal negotiations can take a great deal of time. So, instead of trying to negotiate the terms of your lease renewal yourself, let your broker do what they do best while you do what you do best. They will research the market, analyze lease terms, and negotiate on your behalf while you focus on running your business. Not only will this help save you a great deal of time (and headaches), but it will also help you save money.
Commercial real estate is often the second-highest expense for business owners, behind payroll. So, instead of simply believing your landlord when they tell you, “Trust me! This is a great deal,” take the necessary steps to ensure you are really are getting the best deal. Contractual escalations can outrun the real estate market in some situations, leaving the business owner paying above the current real estate market. An experienced broker will let you know what is fair and help negotiate the best possible terms for your lease. And remember, it is a lot cheaper for landlords/property managers to keep existing tenants, so you have more leverage than you probably realize. They don’t want you to leave. Your business is a valuable asset to your landlord.
The final piece of the lease renewal puzzle is Tenant Improvement (T.I.). Renewing your lease doesn’t have to mean a simple extension of the previous lease terms. An experienced broker will leverage lease renewal to negotiate improvements to better align your commercial space to your business needs.
Finding a Lease Renewal Broker in Maryland is Easy!
United Development Realty is a Commercial Real Estate Broker in Maryland specializing in lease renewal. We know the local commercial real estate market inside and out and have access to up-to-date market data, databases, and tools that track industry trends, vacancy rates, and comparable rental rates. But more importantly, we take the time to get to know you, your vision, and your objectives. We will guide you through the lease evaluation process to ensure you have a full understanding of all your options before we proceed. Then, we work with you and the landlord to negotiate terms that make sense for your business both now and in the future.