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Thinking of Renewing your Lease


I’m highlighting here a video by Steve Kerlovich, of CBRE Limited Commercial Real Estate, because Steve has sound advice for any commercial tenant who’s lease is expiring. In his 2 minute Street Talk Series, Steve discusses Commercial Lease Renewal Strategies and reveals the biggest mistake firms make when negotiating a lease renewal.

We at BANFIELD COMMERCIAL PROPERTIES GROUP actually recommend RE-NEGOTIATING YOUR LEASE VS RENEWING IT. So often we see antiquated clauses that put an unnecessary onus on tenants to perform, or be responsible to perform, certain costly activities in the event of this-or-that occurring. For instance, does your lease have a restoration clause if you move out? If it does, it probably shouldn’t going forward. There are great opportunities for existing tenants to renegotiate their lease with favorable terms. An experienced office broker will create the levers necessary to “unlock” those favorable terms. Timing and having alternative options worthy of your consideration are the 2 crucial factors in negotiating a successful lease renegotiation. These elements together “create the levers you need” to effectively negotiate with your landlord. BANFIELD COMMERCIAL PROPERTIES GROUP are Winnipeg’s leading provider of lease renegotiation services.

Please note, in certain instances, like if you’re surrounded by a large tenant in the same building who might want your space, it can pay to exercise a traditional lease renewal. If renewing is the right decision, a properly negotiated lease renewal clause can pay big dividends. Most leases contain a renewal clause that stipulates when the renewal must be triggered and what the rent will be upon renewal, including “market rates” etc. Often there is no discounted rent provision included in renewal clauses, and there can be. After all, the Landlord benefits from no interruption in revenue, bears no costs associated with base building upgrades, pays no marketing expenses, sees no vacancy costs, has no exposure to market inducements to attract a new tenant, etc. Modernizing the arbitration process should be looked at too. This alone can save both landlords and tenants thousands of dollars in the event arbitration becomes necessary. I’m sure it won’t surprise you to know that the landlord’s lawyer wrote the lease & the renewal provision, and as such the wording is always in favour of the landlord. In today’s office leasing market, blindly renewing a lease with no thought to what can be accomplished is corporately irresponsible.

Contact Joe Banfield to assist your organization in making the right decision!