How tough do you negotiate for rent?

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#1
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For those that lease, do you haggle and kick and scream when it comes to renewing your lease?

My landlord is currently ignoring the reduction is lease prices in the last 2 years and offering a 3% yearly increase only.

I read a book on negotiating and I am polite but I anchore my counter offer very low and the realtor is snippy with me and the landlord won't move.

I worry thar my behavior and the conflict will even get me kicked out as I don't wish to move for obvious reasons.

What do you do at lease renewal time? Are you a tough negotiator? Or do you just sign the inflationary agreement?
 

#2
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Hawaii has an excess of "good" commercial space?

That is not the case in many areas and so the increases generally need to be accepted or you lose the space. I am looking at a small office in Michigan and I am not going to say a word about the rent amount because I think it is perfectly fair, especially given the absolutely prime location. My option to renew may be a different story depending on what they indicate as the renewal rent but by that point I may not even need an office.

To directly answer your question, it just depends on the circumstances. If you are not willing to lose the space, then you are going to need to accept the increase. Is this a 3% annual increase or is it the first increase in how many years?
 

#3
ATSMAN  
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The last time I renewed a lease we came to an agreement after a week of negotiations and the increase was reduced a bit. I also managed to get a new HVAC out of the deal. I did the calculation based on the increase compared to the costs associated with moving, business disruption and other factors and came to the conclusion that the savings if any would be peanuts, PLUS there is no guarantee that the new location would be any better, unless you are considering upgrading.

So as long as you know what the going lease rates are in your area, you should be able to figure out to accept the increase or move. All my friends that had moved all came to the same conclusion that the savings were really not worth it because they could have prorated the increase over their client base and came out even.
 

#4
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Keep in mind that inflation has been out of control these past two years.

I would think communication is key. Maybe he wants to raise it more, but knows that he risks it sitting empty if you balk and move out, and he didn't convey any of this to you. Maybe from his perspective he feels he's cutting you a break and doing you a favor.

If there truly is a glut of commercial office space in Hawaii, what do you have to lose by treating him to lunch and discussing the renewal? It's mutually assured destruction at that point. Neither of you really want the renewal to not go through and for you to move out.
 

#5
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ItDepends wrote:For those that lease, do you haggle and kick and scream when it comes to renewing your lease?

My landlord is currently ignoring the reduction is lease prices in the last 2 years and offering a 3% yearly increase only.

I read a book on negotiating and I am polite but I anchore my counter offer very low and the realtor is snippy with me and the landlord won't move.

I worry thar my behavior and the conflict will even get me kicked out as I don't wish to move for obvious reasons.

What do you do at lease renewal time? Are you a tough negotiator? Or do you just sign the inflationary agreement?

I just closed my office after 22 years in same building. I merged but I digress.

My building was a large commercial building and in 2008 when the crisis hit and my lease was up they lowered my rent to current market. When market was up, I went to market. The only negotiation available was free rent for 3-4 months if I signed a 5 year lease, which I always did.

That said... 3 percent is not that much but I think you are saying that it is now above market?

I'd just pay it and raise my fees 5 percent OR find better space, move and sign a 5 year lease.
 

#6
smtcpa  
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Richmond, VA
I would present the pricing for similar office space in the area and use that to negotiate. Do your homework first. BUT...you have to be prepared to act on it and move. Consider the cost of moving, notifying clients, clients irritated because they forgot you moved, etc.

I am not familiar with the commercial real estate market since we all work out of home offices but in my uninformed mind, I'm thinking 3% is great and move on. I'd figure the time and expense I waste moving would be more than offset by my focusing on growth. perhaps 1-2 new clients would offset it, not to mention a normal 5-10% increase in these times.
 

#7
JAD  
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Inflation is very high. I raised my rates to match inflation and will continue doing so, and my guess is that many/most on this thread have done the same. In light of inflation, a 3% increase in your rent is a deal. Your landlord will earn less real income on an inflation adjusted basis than he did last year.
 

#8
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I agree with JAD. I have a serviced office at Regus. They wanted 17%. Local manager put in an exception request for 10% (my introductory deal had just expired), which they accepted.

To be honest, I’m surprised that you are querying a mere 3%. Do you have more space than you need, such that the 3% increase is more than you can get out of your client base?
 

#9
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North Shore, Oahu
Thanks for all of your answers.

Yes, it a M.A.D. situation, for sure. They are going to blow up the deal for $150 per month? Am I?

I have raised prices for inflation and other reasons, but is it right for me to make clients pay their share of an additional 3% rent increase when market rates for rent have dropped 10% just so the landlord can make more than their market share?

I don't feel like I should pay this much if the comparable markets do not call for it.

Perhaps I should be more sure of the comparable rent prices. It seems like everyone here is replying that rent is increasing, and the landlord swears that market rates have increased.

I am going by what I see online for new tenants in my very same building, but now I wonder if it is accurate.
 


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