Top Five Myths of Renewing Your Lease

Lee Wagner

Lee Wagner | June 13, 2016

A tenant’s biggest opponent is often themselves. It is human nature to believe we can do things better ourselves. This belief definitely applies to lease renewal and a tenant’s belief that they can get a better deal on their own.
This misguided opinion stems from having been in one location a long time with an established landlord relationship. A tenant in this situation may not think a tenant representation broker can bring much value.

To help tenants understand why they should re-think this strategy and gain an understanding of the benefits of using a tenant representation broker, Site Selection Group identified five myths about renewing a lease on your own.

Myth No. 1
I plan on simply renewing and do not need the services of a tenant representation broker.

  • Our objective is not to relocate you, but rather to drive the most aggressive economic and non-economic leasehold regardless of a renewal or relocation.
  • The moment you request a proposal to renew without a broker, your landlord achieves the upper hand in negotiations.
  • By having a tenant representation broker take your requirement to the market, you strengthen your negotiating position.

Myth No. 2
I have a good relationship with my landlord and will get a fair market deal.

  • Your landlord’s objective is to maximize profits and shift both economic and noneconomic risk to you.
  • Your landlord’s adviser has a fiduciary obligation to achieve the best deal for the ownership and does not represent your best interests as a tenant.
  • Your landlord is in the real estate business but still relies on a leasing agent to represent their interest in negotiations.
  • The financial implications of a leasehold are significant; therefore, it is a good idea to have a tenant representation broker representing your interest.

Myth No. 3
I am getting a good deal because my landlord reduced my rent and I am saving money.

  • A “good deal” can only be benchmarked against relocation alternatives that have been considered based on a methodical process of benchmarking competition for your tenancy.
  • Landlords do not give their best deals. Strategy and leverage define market reality. This is a “market maker” vs. “market taker” approach.

Myth No. 4
I already have a lease in place and have to wait until closer to my lease expiration date to realize any savings.

  • The tenant representation process includes improving the terms and conditions of your current lease agreement.
  • Don’t miss the opportunity to achieve unobvious savings and enhanced risk mitigation.

Myth No. 5
Engaging a tenant representation broker for a lease renewal will cost me money in added fees.

  • Brokerage fees are not added to your real estate expense. They are already included in your rent and don’t disappear absent the engagement of a tenant representation broker.
  • Your landlord’s leasing agent receives a larger fee if you don’t engage a tenant representation broker.
  • Your landlord leasing agent is incented to discourage the use of a tenant representation broker, resulting in a more favorable landlord transaction.

These myths provide a great perspective on the advantages of utilizing a tenant representation broker to renew or restructure your lease. Don’t be fooled by the underlying objectives of your landlord or leasing agent. In today’s highly conflicted commercial real estate industry it has become more important than ever to leverage a tenant representation broker to optimize the structure of your real estate commitments. 

 

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