Commercial Real Estate – Now Is the Perfect Time to Renegotiate Your Lease

RENEGOTIATE YOUR LEASEIn these times of uncertainty I really feel the need to blog and get some great info out there that can add value and help people with their commercial real estate. Chances are good that right now your business has too much office and or retail space and you feel like you are paying too much money in rent. But your lease has several years left so what to do? Fortunately there are options available so let’s discuss. Your traditional option is to sublease or assign the lease. The problem with this is that the market is flooded with subleases now so that won’t give you any immediate financial relief. The reason is that even if you were to successfully sublease your space it would take some time and would be at a rental rate far below what you are paying. An assignment is even more unlikely since it would involve another company accepting your lease at the current rental rate without discount.

There is another option which is called a lease recast. In this scenario the landlord agrees to tear up your old lease in exchange for a new longer lease term that is at a lower rental rate and less space. This is typically the best option but unfortunately most businesses don’t even know it exists. Having the market knowledge of where the current rental rates are, the financial condition and position of the landlord and experience in these types of negotiations is critical to a successful lease recast. There is another option that brings legal risk but tenants are considering more and more as the recession worsens.

Absent a personal guaranty there are ways to break a commercial real estate lease. Regardless of feasibility, this route invites legal recourse which can be expensive and time consuming. It is always better to avoid this option if possible. I would be happy to discuss the options that are available to you if you are unsure what to do about your commercial real estate at this time. The consultation is free and should you decide to hire me my fee is paid by the landlord so there is truly nothing to lose and an incredible amount to gain. As always thank you for reading, stay safe and have a great day.

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