Renewal Negotiation

RENEWAL NEGOTIATION

Most business owners will only get to negotiate 3-5 lease negotiations in their lifetime. Most people seek to avoid an uncomfortable conversation with their landlord in relation to a renewal. This is the case for a number of reasons.  It takes a serious amount of time to be prepared and understand market comparable information and who really has time for that? Speaking to agents about what market rent could be, maybe going to look at one or two locations and of course, there is the unnerving conversation with the landlord or the landlord’s agent, where you might not have the confidence to ask for a rent reduction that might be in line with the market or a contribution to help update the interior or any of the other incentives in a package that are typically standard practice for us to ask for. The most common outcome is that the business owner avoids the entire process and just renews their lease.

 

If your lease has automatic annual indexing, this means that your rent will increase by approximately  3-5% every year. You might think that this is a 25% increase over 5 years, but it’s actually worse than that … the increases are compounded on the previous year, so the increase over 5 years at 5% pa is actually 27.63%! Almost a 30% increase in rent over 5 years … so, if you just renew your lease at the passing rent, the whole automatic rent increase process just keeps on going and a sizable chunk of the hard work you are doing to increase your annual sales goes to your landlord to cover the compounded increase in rent.

 

So, think about this … if you have renewed a 5 year lease, by the end of the 10th year what will the increase be …? It will be 62.89% compounded at the end of the 10th year if you have only renewed the lease and not taken the time to renegotiate at the current market rate.

 

Landlords have an advantage when they sit down to discuss a renewal, they have all of the information and information is power. For the tenant there is a significant cost for the convenience of simply signing a lease renewal. This means that there is a significant risk that a large proportion of business owners are overpaying and not understanding that they have value at the negotiation table as well.

 

Your Leasing Co. is your expert in handling these negotiations on your behalf and have been doing this for 20+ years. We understand the position that landlords take in these negotiations, however, we have more up to date market information and experience than they do and we have an unemotional position in understanding the value that you bring as a performing tenant. So we turn the table of negotiating power in your favour. We work 100% for you and do not get paid any fees or commissions from the landlord.

 

Your Leasing Co. has a deep understanding of the terms and conditions that should be in a lease and how they may impact you and more importantly, the risks to avoid. There are typically 30+ negotiable financial terms and in excess of 60 lease parameters for a tenant to consider and negotiate. Your Leasing Co. takes care of all this for you. Below are the key points that most business owners need to know about:

 

    1. We have a standard lease incentives package that we review on every deal. These include cash incentives, fitout contributions, rent free periods, rent abatements or work done to the premises at the landlords expense. These contributions can equate to tens of thousands of dollars, sometimes more, worth of savings or value add over the term of the lease.
    2. Passing Rent. Renewing a lease at the existing or passing rent means that you are now falling into the automatic annual rental increase trap and at the end of the 10th year you could be paying as much as 62.89% more rent than you were paying at the start of your lease. Have your sales grown by 63% over that same time? We already know the current market rent that a location is worth and we will provide you with the analysis to understand your options and have the confidence to agree to a value based negotiation strategy with our help. With the right advice you can gain an advantage and be in a position to turn the tables of power at the lease renewal negotiation.
    3. The Lease Terms and Conditions. This 60+ page document is understandably daunting for anyone. It is full of legal jargon and could contain hidden costs and contractual traps for the uninitiated and uninformed. This equates to risks that can be mitigated with the right guidance. Your Leasing Co. takes care of all the leasing paperwork and instructs the lawyer to ensure that the deal negotiated makes its way into the lease document. Your lawyer will like Your Leasing Co. too, as we make their life orderly and easy. Most importantly, you save money on legal expenses.
    4. Makegood Provision. A makegood clause appears in most commercial leases. This is a requirement for the tenant to return the property to its original condition before handing back the keys upon exit. This can be an onerous and expensive exercise if not negotiated correctly.

 

Call us for a FREE 45 minute review…

 

Looking at a 60+ page lease document is scary and time consuming. Spending time to understand the market and looking at comparable locations in preparation for a conversation with your landlord is not an effective use of your time. Not having the power advantage when negotiating your terms is more than likely going to result in tens of thousands of dollars left on the table for the landlord.

 

Let us do all the work for you. We are affordable and flexible. We want to start every engagement with the right behaviour that drives the best outcome for you. We start with a small fixed fee up front and then a percentage of the cost savings and incentives package that we earn for you at the end. So, we are driven to get the best deal for you and pay for ourselves at the same time.

CALL US FOR A FREE LEASE REVIEW …

Reviewing your lease document? Looking at a 60+ page lease document full of legal jargon is scary and time consuming for most people.

Let us do all the hard work for you for FREE.

OUR SERVICES

COVID-19 RENTAL ASSISTANCE

COVID-19 RENTAL ASSISTANCE

Take away the worry and complexity around the Code/Legislation. Apply the relief and protection that is available for tenants and do the work for them.

 

COMMERCIAL & RETAIL LEASING

COMMERCIAL & RETAIL LEASING

Whether you are starting out, scaling up, scaling down or relocating, it’s critical to ensure that you are moving into the right space and in the right location at the right rent with the maximum incentives package available.

 

RENEWAL NEGOTIATION

RENEWAL NEGOTIATION

Turn the tables of negotiating power in your favour. Have the most up to date market information and market experience on your side. Have a professional lease negotiator do the deal for you.

 

“STAY VS GO”<br> COST BENEFIT ANALYSIS

“STAY VS GO”
COST BENEFIT ANALYSIS

At some stage in the business lifecycle, every business, large or small, needs to evaluate whether they “stay” and renegotiate a lease renewal or “go” and negotiate an entire new lease.

 

PROFIT CENTRE ANALYSIS & FLOOR SPACE ANALYSIS

PROFIT CENTRE ANALYSIS & FLOOR SPACE ANALYSIS

The property strategy includes how floor space is utilised and forms the foundation in maximising business profit over the life of a lease.

 

LEASE EXIT STRATEGY

LEASE EXIT STRATEGY

Outgrown your current location? Space too large for your requirements? Managing the exit or restructure of a lease is another form of specialist lease negotiation.  

 

PERFORMANCE GUARANTEE

We “performance guarantee” our fees. What does this mean?
Our view is that we should generate value and savings that exceed the investment made in us and the services we provide for you.
So, if we don’t achieve this, you don’t pay!