Office Lease Renewal Tips

Business owners face an inherent disadvantage during a lease renewal negotiation.  Landlords recognize the disruption that results from a relocation.  They know that, due to the cost of a move, tenants choose to renew their lease 7 out of 10 times.  Landlords negotiate leases every day, while their tenants will be in the market only every 3 to 10 years.  

Following these guidelines will help even the playing field:  

1. Hire a tenant representation broker.  Their presence will enhance your negotiating leverage by demonstrating your desire to consider alternative space options.  Rely on your tenant representation broker's expert advice to evaluate market conditions and introduce competition into the negotiation.  See 3 Common Mistakes Made by Tenants and 4 Advantages to Using a Tenant Representation Broker.   

2. Start the process early. You need enough time to evaluate your alternatives, negotiate your renewal, and relocate to your alternative if the negotiation fails.  Beware that your landlord will interrupt a late start date as an indicator that you have no intention to relocate.  Thus, starting the process late decreases your negotiation leverage.

3. Have the landlord make the first proposal, revealing his position.  Do not accept the first proposal. Do not believe the landlord's assertions that your prior tenure and/or 'relationship' with the landlord has earned you a special deal. Counter with your own proposal, asking for more than you can get.  Make your first proposal at least as far from the objection as the landlord's initial proposal.  Your tenant representation broker will serve as your advocate and guide during negotiations, and help to take emotions out of a business decision.

4. Limit those involved in negotiations to key executives.  Only speak with your tenant representation broker, do not speak directly with the landlord or leasing agent, as this may undermine your negotiating strategy.

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.

Useable Square footage vs. Rentable Square Footage

Commercial office leases are quoted in terms of "Rentable Square Feet", not "Useable Square Feet".  The rentable area of virtually every office includes a portion the common area, for which the tenant is charged rent.   

Useable Square Feet
Simply put, usable square footage means the square feet used directly and exclusively by the tenant. It does not include common area square footage.  Usable square feet includes private (tenant-only) rest rooms, closets, storage and any other areas used only by the tenant.

Rentable Square Feet
Rentable square footage is usable square footage plus a prorata share of the building's common area.  Theoretically, rentable square footage should be the amount of building space from which the tenant benefits.  Most office buildings have common areas not directly and exclusively used by the tenant, but nonetheless benefiting the tenant (e.g., hallways, stairways, lobbies, etc.).  

Business owners should obtain the services of a tenant representation broker to help with translate these and other convoluted definitions into real dollars and cents prices, allowing for an apples-to-apples comparison of alternative properties. 

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.

How to Lease Office Space

In today's market, the abundance of options can overwhelm business owners leasing office space.  Follow the guide below to structure and simplify the lease process.  


1. Consult with a Office Tenant Representative Broker
A tenant representative brokers will guide you through the process below, contributing expert information and advice.  See the blog posts 4 Advantages to Using a Tenant Representation Broker and 3 Common Mistakes Made by Tenants.


2. Evaluate Your Office Space Needs
Evaluate your office space needs, today and in the years to come.  Determine about the ideal size and layout of your new office. Consider industry standards and the state of your business.  For example, an upscale law firm requires a different floor plan than a call center.  See the blog post, How Much Office Space Do I Need.

3. Determine Your Desired Office Building Location
Weigh the pros and cons of various submarkets.  Do you want to locate in an urban or suburban setting?  Close to a major expressway?  In an office park?  Consider the location of your clients and competitors, and the commute of your employees.

4. Determine Your Leasing Budget

5. Determine Your Parking Needs

6. Tour and Review Properties

7. Select Your Space

8. Sign Your Lease

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.