Bruce Feldman Associates: Lease Renewal and Analysis Exclusively for Tenants

Why does our company need professional representation for our lease renewal?
A lease renewal is every bit as important as an original lease negotiation, but too many tenants treat it as a routine matter, or as a “fixed” expense to simply be extended. Most tenants would not think of negotiating an original lease without competent professional advice, but smart business leaders and attorneys too often limit review of a renewal to a handful of items such as rent increases and relevant changes in the law. In fact, a lease renewal provides the tenant’s best chance to use their perspective of tenancy to address all the details of a lease and positively impact their bottom line and peripheral conditions. Moreover, today’s economy has dramatically changed the nature of lease renewal negotiations. Your business realities have changed and so have your landlord’s. You have new priorities and so does the building ownership. Those tenants that bring true expertise and a “landlord’s perspective” to the negotiating table will sign the best leases.

At what point in time should we begin the process of our lease renewal?
Generally speaking, larger companies with larger spaces will need more time than smaller ones. We recommend that the process for renewing any lease exceeding 25,000 square feet begin between 18 and 24 months from its expiration date. Renewal negotiations for smaller leases should usually begin 12 to 18 months from lease expiration. A tenant must consider the time it will take to find new space if a lease renewal is unsuccessful, as well as the pace at which important internal decisions are made in their organization. It is important to note that a landlord will often have a very different perspective on this timeframe. Landlords believe that a short negotiation window gives them negotiating leverage and many may resist an “early” renewal negotiation. In truth, it is never too early to talk about renewal or extension if the market conditions make it wise for both parties.

We have a real estate lawyer who reviews and negotiates our leases. Why would we need additional help?
There are many differences between “real estate law” and “leasing.” Most notably, is the deep knowledge of real estate market conditions that an attorney alone would not typically bring to the table. A comprehensive knowledge of today’s marketplace – and the factors driving it – is vital to signing a good lease. Many leases that are legally sound and well reviewed by experienced attorneys still fall short of being good leases. A consulting broker familiar with the market and specific positions of landlords will make certain that does not happen.

We’ve never used a representative for our lease renewals in the past; why would our landlord agree to negotiate with you rather than directly with us?
It’s quite possible your landlord will resist. They usually do and that alone should tell you that hiring a consulting broker might be a good idea. They may complain about having to pay commission. They may tell you your lease is good and you are wasting time and money. In the end, however, they will accept the need to negotiate with a broker/consultant and they will understand the need to make a better deal.

We’re generally satisfied with our current lease terms; why renegotiate our entire lease for a renewal?
It might be better to ask why you wouldn’t renegotiate your lease. We start by analyzing your current lease. In our experience there are almost always lease terms that you’re not familiar with – they simply may not have arisen during the initial term of tenancy, but can still cost you in the future. Your lease is a large expense that many tenants regard as a predictable or fixed cost. For that reason, they file it away and may never review it during the course of a multi-year term. That’s not good business. Circumstances change – for you and your landlord. There is likely a better, smarter, more cost efficient deal to be done.

How does a lease audit work? Can a lease audit really recover money for our company?
Assuming a lease has a properly formed audit clause (typical with larger leases, but not with smaller ones), audits will often recover a lot of “small” errors, overcharges, etc. that can add up to larger recoveries. Even in the absence of an audit clause, there are avenues to pursue warranted recoveries.

Can Bruce Feldman Associates assist us with our space planning?
Yes. This is a factor that can be overlooked during lease negotiation and renewal. A good consultant must be experienced in space design, layout, etc. For instance, while BOMA guidelines suggest 200 square feet of space be allotted for each employee, that rule of thumb can differ greatly depending on your business and specific uses. Lease negotiation and renewal must consider a tenant’s growth plan and protect their ability to expand or contract, their right of refusal to contiguous space, their right to adjust use clauses to reflect expanding business needs and other considerations.

We are in a sublease. Can we change it to a direct lease with the landlord?
A direct lease benefits all parties -- the tenant, the sub-tenant and the landlord --so the answer is usually yes. As with most leasing issues, it comes down to negotiation and proper timing. We can make it work for you.

How much does professional representation from Bruce Feldman Associates cost?
There is no cost to the tenant for transactional representation. Leasing commissions are typically paid by landlords in commercial lease transactions. Non-transactional consulting and advisory services are available on an hourly or flat-fee basis.

Isn’t the commission the landlord pays factored in to the tenant’s rental costs?
In a narrow context, one might argue yes. But, as a practical matter, a tenant’s total costs will be so minimized by having professional representation as to greatly offset any potential effect. In almost all cases, leasing commissions are budgeted into a building’s leasing costs. Therefore, any tenant not having representation for a lease or lease renewal is losing a vital service that the process is already structured to provide.