Just thinking about relocating or renegotiating your lease can seem overwhelming. Partnering with the right experts, however, can ensure you develop the most suitable occupancy strategy for your business and long-term success. The following tips are shared in JLL’s tenant representation brochure.
- Share Renewal Profits
Putting a dollar amount to what your building owner stands to lose — by your leaving — is the start of developing a strategy for your company that works to your advantage. It may be obvious, but it’s important to restate — your landlord’s interests may or may not be aligned with yours. As a result, you may not know every ‘card’ in his hand. For example, when a tenant leaves, the landlord suffers lost rent, uncovered debt service as well as ongoing operating expenses and taxes. In addition, new tenants may require huge remodeling costs on top of the marketing expenses needed to attract them.
2. Form a Plan
You may be in exactly the space you want — but if that is the only signal you give to your landlord, they have no incentive to negotiate. If your landlord thinks you’re going to stay put — no questions asked — he will view the total ‘supply’ of sites you want (of all the sites available) as just one, and therefore the ‘demand’ for that site is very high.
This is where it’s important to have a credible plan that explores your options. Here’s the kicker: a legitimate exploration of your needs and options may reveal a solution you had not considered that adds value to your company. You may still want to stay in place, but having a realistic and economic option — that you can show to your landlord — is invaluable to your negotiating position.
3. Review Your Space
There is a relationship between updating your space needs and reaching a reasonable lease renewal agreement — including adding additional amenities for your employees.
Reviewing your space needs is more than a cursory review of your current situation. It means reconsidering office configuration, updating technology infrastructure, eliminating wasted space and adding amenities for employees. If a landlord knows these are the things you need, they are much more willing to make sure you don’t go elsewhere to get them.
4. Know the Market
The market for alternative, suitable space for your company — that offers significant cost savings — may exist. But your landlord doesn’t want you to hear about it. If your core business isn’t real estate, you may not be fully aware of market conditions. They have certainly changed since you last signed your lease. Competing building owners may have different cost structures — less debt, a different marketing plan, even lower taxes — and offer an attractive alternative.
5. Bring in Experts
The longer you wait to sit down with your landlord — without a credible plan for moving — the less likely your landlord is to negotiate on any issue. Many users of space underestimate how long it takes to properly negotiate all the issues in a lease. The truth is, it requires months in most cases. Are you up to the task? We are.
The longer you wait to start the process, the greater the likelihood you’ll be forced to live with the terms that are offered.
This is especially true if you’re unable to present viable options— which requires detailed information regarding both space planning and alternative sites.
6. Consider JLL
Typically we save clients 15% to 25% in occupancy costs — by putting your interests first and foremost. That’s how we built our reputation for integrity. At JLL, we make a bold claim: We turn a company’s real estate into a strategic advantage. That means we’re looking down the road to make sure the lease you sign not only puts your company in good shape for years to come, but also helps you avoid the hidden risks associated with real estate.
Visit JLL New Jersey’s website for more information on Tenant Representation services.