In today's Freedom Friday blog and email newsletter, I want to continue talking about commercial leases (this is turning into a series), and discuss another topic related to commercial leases that doesn't come up often enough, and that's how to renegotiate your commercial lease.  Just because you sign a commercial lease doesn't mean you should be stuck in the same terms so long as you remain in the space.  In today's Freedom Friday blog and email newsletter, I'm talking about, “How to renegotiate your commercial lease.”

Before you can understand how to renegotiate your commercial lease, it's important to understand when you should renegotiate your commercial lease.  You should consider renegotiating your commercial lease if there are significant economic changes.  Major changes in the real estate market can affect rental rates and a booming market could lead landlords to seek higher rents.  Likewise, tenants may seek lower rates during economic downturns.  Also, if your business is growing you might need to increase your space within the same facility, and if your business is downsizing you might need to renegotiate less space or a shorter lease term.  At the end of your current lease term, you should evaluate your situation, and it is usually an opportune time for both sides to renegotiate your commercial lease.  At the same time, if the property requires significant upgrades or repairs, tenants might negotiate for such improvements or concessions in rent rates to compensate if the landlord is not providing the same.  If you decide to renegotiate your commercial lease, here are four (4) steps to successfully renegotiate your commercial lease:

1.  Research and Prepare

The first step to successfully renegotiate your commercial lease is to research and prepare.  You should thoroughly review the current market conditions, including similar lease rates and terms for other properties in your area.  You should also consider your financial situation to understand what lease terms you can afford or offer.

2.    Communicate Clearly

The second step to successfully renegotiate your commercial lease is to communicate clearly.  If you're a tenant interested in renegotiating your commercial lease, you should schedule a telephone conference or in-person meeting with your landlord rather than just sending an email.  Direct conversation tends to produce clear communication, ensuring both parties understand each other's positions.  Transparency about your needs and concerns can also foster a more cooperative, rather than adversarial, renegotiation process.  Also, the renegotiation process should start well ahead of any deadlines which show preparedness and a willingness to reach a mutual agreement.

3.    Renegotiation Tactics

The third step to successfully renegotiate your commercial lease is to use creative renegotiation tactics.  Try to reach solutions that mutually benefit both parties. You should consider flexible lease terms, rent adjustments or concessions, and/or shared responsibilities for property improvements.

4.    Document Everything

The fourth step to successfully renegotiate your commercial lease is to document everything.  Make sure that all the negotiated terms are documented in a written agreement including any changes to rent, lease term, maintenance issues, and other critical aspects.  A lawyer should be involved in this process to protect your interests and make sure the new lease agreement complies with any laws and regulations.

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