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January 2018 Edition
Negotiating Commercial Leases & Renewals FOR DUMMIES
Dale Willerton, CEO of The Lease Coach
It’s more than a book title – it’s the book that commercial landlords hope their restaurant tenants never read! Approximately 600,000 North American restaurant owners lease the space they occupy. The monthly rent paid to the landlord often represents one of their top three overheads (next to food costs and staff salaries). Whether you are about to deal on a new location or negotiate your restaurant lease renewal, here are a few “must-remember” pointers from The Lease Coach:
Negotiate to Win – You’re a nice person right – maybe even too nice? Nice won’t get you a lower rental rate or a better lease deal. If you don’t have a “negotiate to win” mindset you will probably end up paying more than you should. This could be the most important negotiation of your business career. Don’t be casual; get prepared, and do your homework. As The Lease Coach, we like to speak with other tenants leasing within a commercial property to find out what they are paying and so on. Doing this type of lease negotiation homework can greatly pay off.
Start the Leasing Process Well in Advance – The Lease Coach recommends starting the lease renewal process at least 12 months in advance. Don’t automatically exercise your renewal option since this may trigger a preset rent increase. We can often get restaurant tenants a lease renewal rent reduction – or at least stop the rent from going up. The more time you have the better. For new lease deals (new locations) assume the worst and give yourself more time. You don’t want to pay rent before you open for business because your contractor was slow or you couldn’t get all the building permits.
Make The Landlord Pursue Your Tenancy – When The Lease Coach takes on a restaurant tenant client for a lease renewal project we don’t gift wrap your tenancy for the landlord. You are the customer to the landlord – and the customer has clout no matter what real estate agents may tell you. We would never call a property manager and say “the tenant wants to renew their lease” – instead we ask, “do you think the landlord wants the tenant to stay for another Term?”. When he answers “yes”, there should be no reason to exercise the renewal option or to chase the landlord – we make them re-earn your tenancy.
Negotiate For More Than You Want or Need – How did The Lease Coach get one of our tenant clients 12 months of Free Rent on a new lease location? We asked for 18 months Free. The degree of inducements varies from location to location but even on lease renewal deals we often negotiate for Free Rent, Tenant allowance money and so on. If you’re leaving money on the table it’s probably because you simply are not the best person to be negotiating your own lease.
Increase Your Knowledge – Challenge – if we send you a complimentary autographed copy of our book, Negotiating Commercial Leases & Renewals FOR DUMMIES, will you read it? Just e-mail us, mention this article and get ready to learn what the pros know – no strings attached.
Dale Willerton and Jeff Grandfield are Professional Lease Consultants who exclusively work for tenants. Need a free consultation or help with your next leasing project? Email DaleWillerton@TheLeaseCoach.com; call 1.800.738.9202, ext 1; or visit www.TheLeaseCoach.com.
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