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Lease expiries creep up much faster than most tenants expect.
Committing to a five-year term can seem like a lifetime for a business, but that deadline moves up in the blink of an eye.
For a tenant considering renewing or triggering an option to renew, taking care of this impending task is best handled early.
A tenant with no option to renew can approach the landlord at any time to commence early renewal.
Part of that strategy, for the tenant, is catching the landlord prior to them beginning to market the space. The tenant may be in a favourable position to negotiate their best terms before the landlord has to put too much effort forward.
Tenants with an option to renew must be mindful of the notice trigger date. Barring any conflict, there’s nothing to say a landlord wouldn’t renew after a notice to renew has passed, but they are no longer obligated to do this.
For tenants with substantial investment into their leasehold improvement, this could prove a risky mistake.
Tenants backing themselves into corner
Tenants considering a relocation will often ask how much time they need to plan ahead. Sometimes business owners do not want to end up paying rent at two locations, so they put off this task until it’s too late.
Tenants should leave at least a one- to two-month window from offer stage to executed lease, then possession to obtain a new location.
Summer months can take longer for responses to offers if decision makers are holidaying. The same can be said of school holidays as many people choose to take their vacations when their children are off.
The world is hyper-connected but that does not mean that everyone wants to work while on holiday.
The listing agent should know the reasonable time frame for an expected response on any listing, so it is best to ask them for what is achievable.
This is assuming the market has availability, which our current industrial market, for example, does not.
As a result, budgeting for overlap on locations may be necessary to ensure there is no disruption to the business.
Building in buildout time
Municipal permitting for any new improvements can take considerably longer than expected. Between quoting contractors to official approval, this process may take several weeks before work can commence.
Asking a landlord for a fixturing or a rent-free period may be necessary. However, in a market with low inventory they may not be willing to negotiate long timeframes for either of these things.
Budgeting appropriately for all potential expenses and putting in the planning time will place tenants into a much safer position to open their doors to business.
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