Renewal Myths That Can Hurt Your Bottom Line
1. We have a good relationship with our landlord. We’ll get a good deal.
The problem with this is simply that your interests are not aligned. The landlord wants you to pay the most he can get for the space and you want to pay the least. The landlord is in the real estate business and knows the market well. You may not know that the market has shifted down from the last time you renewed and you could be leaving money on the table by simply trusting a relationship that doesn’t have your best interests at heart. I’ve seen tenants pay well above market by simply having their rent stay the same as it was last year.
2. If we use a commercial real estate agent it will cost more
The reason landlords tell you fees will be added into the transaction is to discourage you from using an agent. They do not want you to be familiar with the market and available concessions that they are giving to other tenants. We’ve all had the classic experience where we find a great deal but the fine print reads “for new customers only”. The same thing happens in the real estate industry. Often new tenants will get far better deals than existing tenants because they want to attract new tenants to their building. Once you are there, you become an ‘existing customer’ who is treated worse than a new tenant. Engaging a real estate agent will help you tap into those benefits only afforded to new customers. On average, we save our clients 3-10 times the amount of the commission so even if you did have to pay out of pocket, which would be extremely rare, your savings would achieve well above that cost. When in doubt, find an agent who will allow you to compensate them based on savings achieved vs. standard commission policies
3. We don’t need an agent because we don’t want to move.
We don’t just help people move. Most agents will negotiate better renewal terms than you can so you are ahead of the game. However, a great agent will be worth their weight in gold with value-added services. Find an agent who offers posttransaction services at no cost such as rent reviews, lease notice reviews, operating expense audits, lease administration services, space efficiency analysis and much more. During the duration of your lease alone these services can save you tens of thousands to hundreds of thousands of dollars.
4. Negotiating a lease is easy. I don’t need help.
You probably are a great negotiator. Maybe even better than me. But chances are you don’t eat, sleep and breathe real estate markets. Information is what I have that you may have a harder time finding. While it’s easy to find out what spaces are asking on the internet, it’s a lot harder to find out closed deal information in terms of rent, tenant improvements, concessions, etc. There is not an active commercial MLS within the Salt Lake market so comparable data is traded between the 4 major brokerage houses on a selective basis. Having access to the most comparable data is what will give you leverage in your next renewal. You may simply not know what to ask for and thereby be leaving money on the table. In fact, in the comp data we collect, almost invariably a self-represented tenant will get a worse deal than one represented by a real estate agent. You’d never represent yourself in court so think twice before you do it with your next office negotiation.