By Mel Schultz Leasing commercial lease, landlord, tenant

5 Lease Renewal Negotiation Tips for Landlords

One of the most valuable services Clarity Commercial provides to its property owner clients is renewing leases with their tenants. Lease renewal is almost always a much less expensive alternative than seeking a replacement tenant, by avoiding gaps in income and incurring lower costs of space improvements and tenant representation commissions. Here are a few of Our Team’s tips for making sure your interests and property values are maximized in the process.

Leverage Established Rapport with the Tenant

The lease renewal process begins the day the tenant first moves in, by the property manager establishing a personal working relationship with the actual decision-maker of the tenant, or the local head of the office. It continues with regular contact and prompt response to issues. The goal is to create an atmosphere where the tenant wonders why they would consider moving.

Offer Longer, but Flexible, Lease Renewal Terms

Landlords prefer longer lease terms, providing steady monthly income while minimizing costs of tenant turnover. Tenants would also prefer that structure, but potential changes in financial performance (up or down) or future business strategy call for flexibility. A potential compromise is a longer-term lease – 6 to 10 years – with an option to terminate at a certain point in time or upon certain business events occurring. These situations call for concessions based on the shorter lease renewal term, with “rewards” for not exercising the termination option, or based on the full Lease Renewal Negotiation Tips for Landlords term with the tenant paying back unearned or unamortized concessions if the tenant elects to terminate. For longer-term leases, consider midstream rent adjustments based on the then-current market, or increases based on metrics like the Consumer Price Index (CPI).

Include Relocation Rights

It is sometimes necessary to ask a tenant to move to accommodate another tenant who wishes to expand or relocate into the space, or in the case of retail properties, to optimize the location/mix of tenants to draw more customers. Adding a relocation rights clause to your lease renewal agreement can give the landlord rights to move tenants to help you manage your property more efficiently. These rights should include fair compensation or incentives for the potential inconvenience.

Educate the Tenant on Common Area Maintenance Cost Charges

A renewing tenant will know the history of Common Area Maintenance (CAM) charges at the property. Use the renewal process to “open the books” and talk about the historical trends in each line item, identifying those items that are non-controllable or only partially controllable. For controllable or partially controllable expenses, talk about efforts or processes the owner and/or property manager have implemented to control increases; or if applicable discuss unusual events that have occurred that prevented controlling increases. This is also a good opportunity to get feedback from the tenant on the level and quality of maintenance, considered in light of the image the property is striving for with tenants and the visiting public.

Review and Update Status of Tenant Improvements

One of the most common contentious issues between landlords and tenants occurs at move-out, when there can be confusion or disagreement about ownership of improvements in the tenant space – regardless of who paid for them – and whether tenant-installed improvements can or need to be removed at lease end. Use the renewal process to walk through the space with the tenant and talk about existing improvements and each party’s understanding and expectations, as well as potential improvements needed as part of the renewal. Make sure the renewal language clearly aligns with your discussions, which will set off the new lease renewal term on a good note.

Commercial Lease Renewals do not have to be time-consuming or cumbersome. Let Clarity Commercial take care of the legwork for you. For help managing your commercial leasing, Contact our Team Today.

July 14, 2022

By Mel Schultz Leasing marketing, Property Management, tenants

Marketing Your Commercial Property to Attract the Right Tenants

Marketing your commercial property effectively can attract the ideal tenants, enabling you to expand your commercial portfolio without the need for further property investments. Gaining a clear understanding of your local market, curating a list of prospective tenants, and utilizing effective marketing techniques are key strategies in securing the perfect, long-term tenants for your portfolio.

Understand Your Local Market

Your local market plays a large role in your success finding tenants. Let’s say you own a medical building. Are you the only medical building in your area, or are you close to other clinics or a hospital? What are the vacancy rates in the buildings around you? What amenities do these buildings offer, and how do they compare to yours?

Answering these questions in regard to your neighbors and neighborhood can help you understand your local market and the types of tenants who may be attracted to your area. Armed with this knowledge, you’ll be able to craft sales and marketing materials that speak to the benefits of leasing in your building.

Understand Your Ideal Tenant when Marketing your commercial property

Once you understand your local market, it’s time to do some research on your ideal tenant. There’s more to understanding your ideal tenant than simply wanting them to pay rent on time. You’ll want to decide how long your ideal lease is, the tenant improvements you’re willing and unwilling to make, and the types of businesses that would fit well with your current mix of tenants.

Invest in Photography

Professional photography is one of the best investments you can make in the marketing of your property. Many tenants look for space online, and having lots of beautiful photos of your property can separate it from other available spaces. You can take your listing to the next level with video or interactive walkthroughs of your building and tenant suites.

Blend Traditional and Digital Marketing Strategies

With your professional photography and videography in hand, it’s time to create your property’s listing. You will have a greater chance of finding the ideal tenant if you blend traditional and digital marketing strategies. Develop a one-pager for your property that you can send digitally as a pdf or hand out to potential tenants. Be sure to create an online listing for your available space and promote it on social media, too.

Property owners who partner with Clarity Commercial can take advantage of our online listings as well as our full suite of done-for-you marketing services. We maintain and up-to-date list of available properties for lease on our website. Our property managers work tirelessly to market your property to your ideal tenants, including digital marketing, print marketing, and flexing their professional networks.

For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.

Affiliations & Credentials: We are proud members of IREM, CCIM and MNCAR along with various professional organizations and hold relevant certifications in the real estate management field. Our affiliations and credentials demonstrate our commitment to excellence and our ongoing efforts to stay up-to-date with industry best practices.

Eagan - For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.

Affiliations & Credentials: We are proud members of IREM, CCIM and MNCAR along with various professional organizations and hold relevant certifications in the real estate management field. Our affiliations and credentials demonstrate our commitment to excellence and our ongoing efforts to stay up-to-date with industry best practices.

• Spring 2023 IREM Property Manager Professional Development Events
• Commercial Property Spring Cleanup Tips
• Upgrade to Cloud-Based Access Control
• Weather.com
• Minnesota Department of Natural Resources
• HomeAdvisor
• Energy.gov
• National Roofing Contractors Association

For expert help marketing your commercial property, get in touch with the Clarity Commercial team today.

June 1, 2020

By Mel Schultz Leasing commercial, COVID-19, tenants

Ways Property Managers Can Help Their Tenants Open Safely during COVID-19

A Note on COVID-19

The Clarity Commercial team is watching the COVID-19 pandemic closely and is following all guidelines from the CDC and the State of Minnesota. Our team is stepping up hand hygiene and practicing social distancing to help slow down the spread of the virus and ensure we are healthy and able to serve you and your properties through the pandemic.

The COVID-19 pandemic is unlike any public health crisis we have faced in our lifetimes. Over the last three months, many businesses in Minnesota moved to remote work or were forced to shut down to prevent the spread of the virus. Now, Governor Walz is slowly reopening the state, and many businesses are back to work.

But back to work does not mean back to normal. Businesses are required to work at 50 percent occupancy and take precautions to ensure the health and safety of their staff and patrons. This can be an enormous task for small businesses. Property managers are in an excellent position to lend a hand and be an advisor for their tenants. Here is how a property manager can help tenants open safely during the COVID-19 pandemic.

Understand Who Is Allowed to Reopen When Covid-19

On May 18, Governor Walz’s Stay Safe order went into effect, allowing many businesses to reopen under strict circumstances. Businesses that were allowed to reopen included retail stores, malls, and businesses that sell, rent, maintain, or repair goods.

Bars and restaurants could continue to be open for delivery and takeout service only. Hair salons, spas, tattoo parlors, and nail salons are not allowed to reopen until June 1. Additionally, companies whose staffs were working remotely must continue to do so.

Help Tenants Enforce Social Distancing Rules

Enforcing social distancing within a business requires some planning. Offer to help your tenants reconfigure their break rooms, shop floors, office space, and retail floors to ensure staff and patrons can maintain at least six feet of distance. Some businesses will need to limit the number of people in their space at one time, which may include staggering work schedules and asking patrons to wait in their cars until it is safe to enter.

Temporary signage is a helpful tool for enforcing social distancing. Wayfinding signs and floor decals can help keep people six feet apart and inform people of a tenant’s social distancing policies. Offer to help source these items for your tenants using your own professional network.

Support Tenants’ Efforts to Sanitize Their Spaces

Maintaining a healthy and sanitary space will be another top priority for your tenants. They will need to frequently clean high-touch surfaces such as door handles and point-of-sale devices and provide hand sanitizer for staff and patrons. Many will require staff members to wear masks and wash their hands frequently.

Property managers can support their tenants’ efforts to maintain clean and safe spaces. Ensure your team is cleaning and sanitizing common areas frequently, including lobbies, meeting rooms, and bathrooms. Consider how you can make it easier for your tenants to purchase hand sanitizer, cleaning products, and masks.

Keeping our community healthy and safe is everyone’s responsibility. Property managers can play their part by supporting their tenants as they reopen safely. For more information about how Clarity Commercial can support you and your business during this time, contact us today.

Commercial Lease Renewals - retain commercial tenants

February 21, 2020

By Mel Schultz Leasing commercial leases, negotiation

5 Tips for Negotiating Commercial Lease Renewals

Real Estate Marketing - Commercial Lease Renewals — empty strip mall with pastel stucco and stone accents

Much can be found online to help tenants negotiate favorable Commercial lease renewals. But fewer resources exist for landlords when it is time for them to negotiate a commercial lease renewal. Clarity Commercial works with property owners to help them secure lease renewals from their tenants. Here are a few of our team’s tips for making sure your interests are protected in the process.

1. Standardize Your Lease Forms

Standardizing your lease forms has several benefits. First, it saves you a lot of time that you might otherwise spend recreating lease agreements. Work with your attorney to create one or two lease agreements with standardized language and terms. Then, when it is time for a tenant to renew their lease, you can simply provide them your standardized form and trust that you have the details and contingencies covered.

2. Offer Long Lease Terms in a Commercial Lease Renewals

Longer lease terms can save you time and money. They guarantee that you will have steady monthly income coming in from your properties over three to ten years without having to continually fill space with new tenants, which can be costly. Longer lease terms also benefit tenants who wish to maximize their investment in renovations and other tenant improvements.

3. Consider Relocation Rights

If you own a commercial property with multiple suites, a relocation rights clause can help you make sure you are managing that property in the most efficient way possible. Sometimes, it is necessary to ask a tenant to move spaces to accommodate another tenant who wishes to expand or downsize their space. Adding a relocation rights clause to your lease agreements can give you the right as a landlord to ask tenants to relocate to another suite in your property.

4. Offer a Triple Net Lease to Cover Common Area Maintenance

Determining maintenance costs should not cause headaches when it is time for you to renew a lease. We encourage many property owners to offer triple net leases to tenants, which offers a better return to landlords than the flat fees included in modified gross leases. However, calculating maintenance costs for a triple net lease can be difficult, so work with an experienced property management company like Clarity Commercial to maximize your ROI.

5. Protect Your Interests When Offering Tenant Improvement Allowances

It is common for landlords to negotiate improvement allowances with tenants to help them cover the costs of renovations. Offering allowances for tenant improvements can help you attract and retain long-term tenants. To protect your investment in tenant improvements, you can choose to stipulate that you will own any permanent fixtures and improvements your tenants make if and when they move out of their space. Or, you can ask tenants to use contractors you trust to perform the work.

At My Clarity Commercial, we understand the importance of creating a mutually beneficial relationship between landlords and tenants. That’s why we offer guidance on tenant improvement allowances to help you maximize your return on investment while also providing a positive experience for your tenants.

When negotiating an allowance for tenant improvements, it is important to consider the specific needs and wants of each tenant. This can include factors such as the type of business they are running, their target market, and their budget. By understanding these details, you can tailor your improvement allowance to best suit their needs while also ensuring that your investment is protected.

One way to protect your investment in tenant improvements is by stipulating ownership of permanent fixtures and improvements made by the tenant. This means that when the tenant moves out, they cannot take these improvements with them and you will be able to benefit from any value they added to the property. It is important to clearly outline this in the lease agreement to avoid any conflicts or misunderstandings.

Another beneficial aspect of tenant allowances is the ability to attract and retain high-quality tenants. By offering a generous allowance for improvements, you are showing potential tenants that you are invested in their success and willing to work with them to create a space that meets their needs. This can help attract reputable businesses and increase tenant retention rates as they have already made investments in customizing their space.

Commercial lease renewals do not have to be time-consuming or cumbersome. Let Clarity Commercial take care of the legwork for you. For help managing your commercial leasing, contact our team today

For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.

Category: Leasing

5 Lease Renewal Negotiation Tips for Landlords

Leverage Established Rapport with the Tenant

Offer Longer, but Flexible, Lease Renewal Terms

Include Relocation Rights

Educate the Tenant on Common Area Maintenance Cost Charges

Review and Update Status of Tenant Improvements