Are you beginning to notice your free seat on the morning commute being filled? Or, maybe finding a car space is a lot more difficult? And, what about those commercial property vacancies?
It’s no surprise that property leasing prices have skyrocketed. According to Sydney Morning Herald, A-grade office rentals in Sydney have risen 12.6 percent over the year up until June 2018, with the average office prices now sitting very pretty at the $1,030 per square metre mark.
With a combined average of only 4.1 percent of Sydney and Melbourne’s property vacancies available, businesses are feeling the squeeze… (and we don’t just mean on the overcrowded trains).
It’s not you… it’s the landlords
In this property climate, the chances of scoring a hot new commercial property deal with the incentive covering a new office fit out are slim to none. And capital contribution fit outs won’t be coming back anytime soon, with the property landscape staying this tight until around 2020 to 2021. Yikes.
So, if you can’t get your business into a brand-spankin’ new crib and your current lease needs a lot of work… what’s next?
We say work with what you’ve already got, and do it your way.
There are a variety of benefits for shoring up your current lease, but there’s no need to go in blind. We’ve got five tips on how to renew your current lease terms to get a better deal:
1. Build a relationship
Rapport, good communication, and transparency are key to any successful partnership, and building a relationship with your landlord is no different. Getting to know your landlord allows you to be more flexible when it comes to renewing your commercial property lease. If you’ve got a tenant history that’s as shiny as the dollars you always pay on time, you should have no problem getting your landlord on your side.
2. Start early
It’s likely that your landlord will wait until your lease is almost complete before they consider starting a conversation about it. For you, time and effort put into finding a space, as well as packing up and moving is just not worth it. It puts tremendous pressure on you as a business owner – leaving you with no choice but to pay the inflated asking price.
Beating your landlord to the punch allows you enough time to come to a mutual agreement. Begin the conversation 6 to 12 months before your lease is up, and remember to keep an email trail and records of any verbal agreements.
Now is your time to put those endless hours of watching Law and Order to use.
3. Do your research
Knowing the landscape of market conditions allows you to come to a fair compromise that will work out in your favour – which is where an industry adviser can help. This ultimately means you might finally have the budget to buy that in-office bar and snooker table!
Remember, there’s pressure on your landlord here, too. The last thing they need is an empty office space in a few years time, so use this to your advantage.
4. Give and take
Landlords appreciate a little bit of give and take in your leasing negotiations but in this property cycle, there is less giving and more taking.
Consider offering to sign on for a longer lease period. This means your landlord can count on you for consistent income and can lock you in for the upcoming oversupply of office space in 2021. It’s a win-win.
5. Get a professional on your side
Are you thinking about renewing your lease? When you work with professionals, you’re leveraging extensive industry knowledge, leasing advice and decades of training in the art of the negotiation. It’s a specific skill – and it is gained from experience.
CR Commercial Property Group offer services such as tenant advisory and tenant representation for this exact purpose, and we handle the whole process for you. If you’re looking to renew your commercial lease, or need some advice, get in touch.