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Should You Use a Tenant Broker When Negotiating a Lease Renewal?

While talking to businesses all over the city about finding office, retail, or warehouse space for their company, a question that regularly pops up is whether or not the services of Houston commercial real estate brokers are needed when negotiating lease renewals. The short answer is ABSOLUTELY!

Just as we would advise a new tenant looking for space never to walk into a courtroom without a lawyer, we wouldn’t recommend going it alone when negotiating the renewal of a current commercial lease.  Here are a few reasons why:

  1. Having a current lease with one landlord doesn’t preclude you from being free to negotiate a new lease with another.  If you want to “shop around” and see what else is out there before renewing a lease at a current location, you will want a market expert with first hand knowledge of what space is available as a guide.  Your current landlord will also know that you are serious about finding the best deal possible for your business if you have a tenant broker, and they will be motivated to fight for your renewal.
  2. Because your current landlord wants to keep you in his property and competing landlords are trying to lure you away, you are all of a sudden the hot ticket item that everyone is fighting for.  It’s an ideal situation for a tenant to be in and it’s CRUCIAL to have an experienced tenant broker helping you sift through and digest every proposal on your way to making the best decision for your business.
  3. Renewing your lease doesn’t just mean signing an extension to the old one under the same terms.  While the tenant may be staying in the same suite, it’s essentially a new lease agreement and the tenant may require T.I. concessions towards suite modification or maybe want some free rent at the start of the renewal.  Having a tenant broker on hand to negotiate the renewal terms can only benefit the tenant.

The way a tenant broker gets paid on a renewal can vary.  Some landlords will pay a commission, some will pay a commission to the renewing broker only if that broker represented the tenant in the original lease signing, and some won’t pay a commission at all.  Should the latter be the case, the broker will work for a fee from the tenant but that cost will more than pay for itself several times over with the savings a good tenant broker can get the tenant in the lease renewal agreement.  Like most things in the commercial leasing business, it’s all negotiable.

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