Don’t press “snooze” on your lease

ararmBy far, the most frequent objection I hear is, “We have plenty of time and don’t need your services.” With two years remaining on your lease and the perfect amount of available space for expansion, you probably don’t need my services.

But thinking that a real estate deal can get slapped together in three months is a mistake. Consider the following “musts” when negotiating a new lease.

1. Understanding the market. You can ignore this if you don’t care about getting a market sensitive rental rate and just plan on activating your lease’s renewal clause. But in reality, it’s going to take weeks to digest all of the available space and various options available to you.

2. Negotiating business terms. There are a whole host of items that should be negotiated and understood before the lease is drafted. There are the obvious items like rental rate and lease term, but also more esoteric items like expense pass-throughs, sublease rights, termination options, etc. Figure this will take at least a month when you consider internal discussions, committees, and waiting for landlord responses.

3. Lease review. Now is when the lawyers get involved. If you get lucky and hire effective counsel, he will work quickly on your behalf. But that’s only one part of the equation. The landlord’s attorney might not be so expeditious. I’ve seen overworked landlord attorneys take weeks to generate one round of comments. I would add another month.

4. Space planning and construction. If there is significant construction involved, an architect will have to draw up construction documents. This will take a few weeks. Then they have to be submitted to the building department for approval, another month to six weeks. Then the construction has to actually occur, another two to six weeks.

Even conservatively, I’ve just outlined a process that’s almost six months long. That assumes everyone works together, there are no crises in the middle, and nobody takes a vacation. In reality, it can take a lot longer. It doesn’t cost anything to start a little early. Starting late on the other hand can cost you quite a bit.

One thought on “Don’t press “snooze” on your lease

  1. Pingback: What should your broker be doing for you? « Corporate Real Estate

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