Renewal clauses are an important part of lease negotiation, but you may not know what exactly these clauses involve or how your landlord might be approaching them. Here is a little information that might help you better understand negotiating renewal clauses for your office space lease in Overland Park:
What your landlord is thinking:
Usually landlords and leasing agents want you to sign a long-term lease—one that extends over several years. This guarantees them a flow of consistant income and means that they do not have to go through the hassle and financial stress of having to re-lease the space every few years.
A long term least might not be the best option for your business if you are growing and do not want to get stuck in a five or 10 year lease. Your best bet might be to consider a short-term lease with option to renew. A renewal clause in a lease gives you the power to decide once your initial lease term expires whether you want to extend the lease or not. For instance, instead of signing a fixed 10-year lease, you could negotiate for a two-year lease with four two-year renewal options.
How to negotiate renewal options:
The ideal renewal situation is negotiating a series of predetermined raises in rent for each new renewal term. If you do not settle on predetermined increases, your landlord could raise your rent in accordance with fair-market rates, which could mean some potentially large and unforeseen rent increases—in particular if your business is renting in an area where commercial office space is in high demand.
Understanding how the length of a lease could affect your business and your landlord’s agenda when dealing with lease lengths can help you be prepared to negotiate the best lease and renewal options for your business!
Want to discuss the lengths of leases for a Southcreek Office Park space? Give a DDI commercial real estate broker in Overland Park a call at 913-685-4100!