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The building in which we lease an office was sold last year. In talking to the new broker about whether they intend to offer us a lease next year when ours expires, the broker mentioned they would even be willing to let us sign the lease early.
I've never heard of such a thing.
Why would the broker think we would be interested in such a deal? Did I sound like a totally naive person on the phone, and he thought he could get a little more out of me? Maybe there is some reason I'm not aware of that a tenant would want to sign a lease early?
What are you seeing as a penalty for doing that? Are you wanting to be able to leave? Are they offering it at the same rate? Seems like a benefit to lock in the rate if it might have been likely to be go up. Are there new fees associated with renewing? What's the issue?
If the building was sold, why would you not be interested in signing a lease early? That seems the best way to assure that they will continue to lease the office to you.
You expressed concern to the new broker about continuing to lease. He offered you the best assurance possible.
Renewing a multi year lease a year to six months before expiration is completely normal in commercial real estate. In fact if I haven't gotten a signed renewal three months before expiration I start marketing the space.
Usually the biggest problem is getting the tenant engaged for long enough to finish the deal. Many put it off until the last minute and you have to spend a lot of time hounding them down. He took your call heard your concern and figured it was a good time to get it done quickly. After all he gets his commission when you renew so if you are engaged now he can get a deal done quick and get his money from the owner. You actually might get a better deal because a year of inflation won't be factored in and you have ample time to find another space if the terms are bad.
Late renewers are people who usually get bad deals. I had a seafood restaurant that would let the renewal sit on their desk until their lease expired time after time. We finally did renewals where we strategically set the end date as the week before lent and from then on just told him 3 months out he needed to sign then or be out at the end of the lease(right before the highest sales month for his business). In other words this guy ain't playing hardball with you.
All the time. Happens with commercial all the time and probably happens with a good residential too.
Thinking on the commercial side...3-5-7 year lease and depending on what the space is I would want to renew early...maybe as much as a year early....either owner or tenant should want to know what they want to do....grow, stay put, move.
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