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Lease Renewal Variables   

The single most important variable about lease renewals is when you start the process.  In every lease renewal negotiation, TIME is either your friend or your enemy.

If you do not have any options, and your business is very successful, approach the Landlord early to try and ensure you have a fully negotiated lease extension well in advance of your “End of Term”.

If your store is doing so poorly that you are seriously considering closing the business, especially if the rent went up, then nothing reinforces that position better than letting your lease expire.  When the lease expires, approach your Landlord to renegotiate the terms.

Every Tenant should approach a lease renewal negotiation with the same intensity they did with the original lease document.  BUT, there is one major difference -- you now have the benefit of knowing what the true sales potential of the location is.  So ask yourself this question, “What would I change to increase the sales?"

It may be the center itself or the location within the center. You may decide your store should be bigger or smaller. All these items plus many more need to be addressed in renewals.

Committing to a location and signing a lease is a little like dating and getting married. Make sure you're comfortable with the relationship before making the commitment.  As part of the renewal process, re-examine the New Space Variables checklist. Consider addressing those items you were not successful in negotiating in your original lease form.  Below are items you should be considering as part of your lease renewal process.

bullet Timing of request vs. lease end of term
bullet Current and past sales trend
bullet Sales reporting lease required
bullet Size of existing store
bullet Alternate centers considered for relocation
bullet Pre-negotiated option part of existing lease
bullet Remodel considered as part of lease extension
bullet Willingness to terminate lease if terms are unacceptable
bullet Current condition of center
bullet Projected future condition of center
bullet Stability of Landlord
bullet Stability of Anchors
bullet Frequency of new and/or better tenants being added
bullet Cotenancy added as part of renewal
bullet Exclusive added as part of renewal

Selecting New Space Variables that were not addressed in the original lease negotiation may be reintroduced at lease renewal time.

 

   

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