Pop quiz to the business owners reading this post: When does your industrial real estate lease expire? If you’re like many business owners, you likely have a general idea. But if you have even hazy plans to relocate or expand when the lease expires, it’s worth getting the ball rolling up to even two years in advance. Here’s why.
If you’re leasing fewer than 15,000 square feet or so, 12 months is usually sufficient for strategic thinking about next steps. It’s enough time to begin assessing and analyzing your current location and lease, and to make decisions about what you want in a future property.
If you’re a large corporate entity or a client with a portfolio of leases, you’ll need even more time to properly evaluate your next move. Allowing time to consider options like renewing, relocating, closing down a part of the operation makes them easier over the long term.
And here’s a tip. Being upfront about the fact that you’re taking time to see what’s out there can create much-needed leverage with your current landlord. More times than not, renewal provisions come with higher rental rates than what the rest of the market offers. A cooperative landlord can make renewal a better option than relocation, and making no secret about the fact that you’re shopping is a good way to encourage cooperation.
A landlord may also be willing to offer concessions if a tenant will accept an early extension, which is another reason to begin thinking about expiring leases sooner rather than later.
Be very clear – if you start thinking about your lease expiring because you’re getting renewal paperwork in the mail, you’ve missed an opportunity to effectively evaluate your market competition. And unfortunately, that may cost you.
Consulting with an experienced agent for your next lease can make this process easy. That way, you’ll know all the right questions are being asked at the right times.