3 Reasons To Review Your Lease (Part 1)

3 Reasons Why You Should Review Your Lease At Least Once a Year (Part 1)

When is the last time you reviewed your office space lease?

Your commercial office rent is often the second biggest business expense after your employee salaries. This is an often ignored portion of the overhead expenses that should be scrutinized annually.

The biggest difference between office space expense and payroll expense: it is not as flexible.

Many business owners are forced to make difficult decisions during tough times and furlough or lay off employees. The reason you need to pay particularly close attention to your office rent is you cannot simply furlough your rent.

Here are 3 reminders why you or someone in your office should audit your commercial real estate lease and double-check your office space rent on an annual basis:

Reason #1 – Know your lease end date at least 9 months in advance and plan around it.

Most office space leases in Folsom and the Greater Sacramento area are 2 to 5 years long. This means your window to renegotiate your lease only comes every 2 to 5 years.

Surprisingly, many business owners don’t know their lease end date or even have reminders on their calendars.

If you take anything from this article, look up your lease end date and set calendar reminders for 1 year, 9 months, 6 months, and 3 months before your lease end date.  

Why does it matter? In order to perform a thorough office search and lease negotiation, you will want 6 to 9 months of time to prepare. That may seem excessive, but negotiations, lease drafts, and move/remodel logistics often take much longer than you’d expect.

Most importantly, waiting until the last minute to discuss lease terms with your landlord kills most of your negotiating leverage.

Imagine if you went into a car dealership and said, “I have to buy a car by the end of the day and it’s too late for me to go to another dealership. Please give me a good deal.” This is not an ideal position to negotiate from.

The full market analysis may seem like a major undertaking, but we have your back. Contact Carlsen O’Connell Commercial Real Estate and we can do all the analysis for you. We can scour the market, layout other options, and make sure the negotiation is started with ample time for maximum leverage.

Get a Professional To Review Your Lease!

For the reasons above, we recommend doing a quick lease review every year. If you want to outsource that process for free, contact Carlsen O’Connell Commercial Real Estate at 916-287-7439 or email us at dave@carlsenoconnell.com.

Carlsen O’Connell Commercial Real Estate offers a free service to help business owners find office space for rent in Folsom, Rancho Cordova, Roseville, and the Greater Sacramento Area.