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negotiating commercial lease

I have been leasing 350sqm in prime location in southport QLD for 7 years. My lease is up in one year.
Commercial properties are vacant around the same area. I am going to look around at what is avail to suit us then would like to negotiate a reduction in rent and sign up for another 2 years or so.
What should be my primary considerations in creating a solid negotiation.
I would like some advice on negotiating if possible.
Thanks

1 Answer

Hi Jacqueline
I have recently managed to reduce my rent in one of my businesses by 30% .
The lease was nearing the end, and I did all my market research of comparable tenancies (rent and outgoings) of similar sizes. I went to the landlord and suggested calmly that seeing the lease needed to be re-negotiated I have been looking at the current market and it appears that our rent is somewhat high for current market conditions.
They then came back and asked me what I had looked at, and I provided a list (all within a few 00 metres) - showing the rent and outgoings. They came back with an offer that was higher than all the surrounding offices which I expected. They (landlord) were gambling on the fact that a move of my office would be a cost of 20-30k and therefore if I paid 10k extra rent over the next few years that would be less than the hassle and stress of moving.
In the current economic climate around most of Australia, rents have definitely come down in many areas and negotiation is possible.
The only challenge you face is still having a year to go, if the landlord believes that rents will rise (and vacancies drop) over the next 12 months then they may be less negotiable. (my negotiation was done within 6 months of lease expiry) The business you are in may be complex to move and you may need a long lead time (hence starting early) .
The reality is that its worth opening the lines of communication now as most landlords will try and keep tenants - rather than display arrogance
Hope that helps
Rael

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