Lockdown is coming to an end, the warmer months are drawing in and that means that people will be looking forward to a bit of normality. Shops will be re-opening in a couple of weeks so they will be getting ready to open their doors. Some shops may actually be going through a renewal for their lease and there will be some who have got one soon. It is hard trying to understand the advantages and disadvantages of a commercial lease renewal so we will discuss this in this short article.
Advantages Of Renewing Your Lease
- If a business is paying above the market rate for business premises, renewing the lease gives greater leverage to negotiate a reduced current rent rate to the market rate. This is extremely helpful with many businesses struggling to reopen their doors for business.
- Renewing your lease helps to solidify your business location. If a business stays in the same location it minimises costs and interruption to business. It can be difficult to communicate with customers that you are moving location and it can be even harder getting them to follow you, rather than going to the next closest place. As well as this, there will be no moving expenses, loss of work hours or any other expenses including changing the business address as you will be carrying on business as usual.
- If you were changing location for a new space it can usually be expensive, as there are many add on costs such as brokerage fees and landlord expenses for the commissions they pay. This can all be prevented by staying in the same place.
Disadvantages Of Renewing Your Lease
- It is important to take a look at the market for new locations before renewing the office lease. If you have already signed your office lease, you won’t be able to see if there are better spaces more suitable for your business which could have been chosen before renewal.
- If your current place could be laid out differently or you need more space, renewing the space will remove the opportunity to build a new space in a new location where you can plan how space looks moving forward, missing out on the latest trends in the commercial space.
- A business may miss out on expanding the business and the size of the space for increased customer traffic, the end of lockdown is going to bring a huge increase in traffic in some locations and it would be best to have a space suited for social distancing.
The truth is, landlords, want good tenants to stay. Losing rent each month is a landlord’s worst headache as they will have to pay all the bills whilst it is empty. This means that it is extremely important for landlords to have a great working relationship with tenants so they stay as long as possible. This can be used as an advantage as this will enable you to create a market survey. This will take some time but it can be used as a great negotiating tool.