Most tenants accept their lease options and conditions as if they’re etched in stone. And barring a natural disaster or alien invasion, who would even consider renegotiating midterm? Just when you think something is non-negotiable in the commercial real estate world, think again. Especially during times of economic or political uncertainty, strategic real estate decisions can pay dividends in the long run.
Key to a sound lease administration strategy is ensuring that your business is operating under the most favorable real estate terms. This can be a labor-intensive, time-consuming process. In fact, most franchise owners are so laser-focused on running their businesses and obtaining prime locations that they don’t always have the time or resources to take advantage of midterm leverage points such as:
- Landlord participation in remodel costs (extending the term for rate relief)
- Inconsistent sales performance (shifting occupancy cost-to-sales ratios)
- Anchor vacancies (increasing in-line tenant retention efforts)
- Prolonged construction, crime or other adverse circumstances
While paying less rent is always the goal, the team at Property Works Advisory Group, a division of Property Works, also prioritizes non-economic clauses in the renegotiation process. For instance, it’s important to add favorable assignment language that allows your business to react to changing conditions by shifting assets or modifying the ownership structure. Eliminating a security deposit, personal guaranty or percentage rent clause also are potential lease concessions.
When times are good, franchise resources are focused on new development and location openings, which are taxing on the management team. Unfortunately, obtaining favorable lease renewal terms most often take a back seat, resulting in delayed or rushed dialogue in renewal negotiations. However, when professional lease negotiators are involved, the savings more than pay for themselves. Even a $350 monthly rent reduction at one location, for example, can net more than $75,000 in savings throughout 20 years of lease coverage.
The Property Works Advantage
Nearly 20 years ago, Property Works was founded as a lease negotiation and renegotiation company. Today, the Property Works Advisory Group (PWAG), a division of Property Works, exists solely to help its clients obtain the most favorable lease advantages possible.
Located in Cambridge, MA, experienced PWAG tenant representatives can seamlessly provide conflict-free representation on behalf of Property Works’ clients since their critical lease data and landlord history have been abstracted into our software platform. All it takes is a phone call to get started.
If your portfolio has outgrown your management resources, call us today and see how the PWAG team can take your lease strategy to the next level.