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Renegotiating a commercial lease in Michigan

On Behalf of | Apr 20, 2022 | Commercial Real Estate |

As many business owners know, the commercial real estate market has changed dramatically over the last few years. If you signed a long-term lease several years ago, your rent may be more than the property is worth. How do you know if you should renegotiate the terms?

Renegotiating now may favor you

Almost every company will come out ahead if they decide to renegotiate their commercial real estate lease in today’s market. Tenancy is more valuable now than ever to owners as spaces remain vacant. Landlords who won’t meet tenant requests for lower rent, building improvements or other perks run the risk of losing business. The market prices of neighboring buildings may have plummeted since you signed the lease, meaning you may no longer be getting a good deal. If such is the case, you have a good chance to ask for concessions as landlords are more willing to negotiate.

You may think that you have to wait until the end of your lease to renegotiate. However, if you are a reliable, credit-worthy tenant, you have leverage with a building owner who will want to keep you.

Understand the market before negotiating

Every lease situation is different. However, going into lease negotiations without understanding the state of similar properties in your area may not bode well for your when attempting to renegotiate lease terms. You want to remind your landlord about how valuable your business is instead of angering them with unreasonable or unrealistic demands.

Do your homework and find out the going rate for rentals in similar buildings. A better deal doesn’t necessarily mean lower rent, either. Remodeling your space to better fit your needs or numerous other incentives can make your current lease more attractive.