how to renegotiate a commercial lease in Atlanta
May 22, 2024 Uncategorized No Comments

How to Renegotiate a Commercial Lease in Atlanta

There are many circumstances where renegotiating a commercial lease can be to your advantage. If you’re downsizing and could sublet a portion of the property, then renegotiating for the ability to do this is a great way to cut costs. You should also consider renegotiating if there has been a drop in demand for commercial property, as property owners may be willing to lower prices instead of losing your business to a cheaper property.

There are plenty of things to consider and potential rent changes that you could pursue to better your situation. Here is how to renegotiate a commercial lease in Atlanta.

Determine Your Goals

What do you want out of your renegotiation? Knowing your best-case scenario is important. First, explore the different options you have to lower rental costs or otherwise change terms as leverage. These could include:

  • Abatement: Abate rent for a certain period of time (it is worth looking into whether you already have a rant abatement clause in your lease)
  • Temporary rent reduction: Lower rent for a certain period of time with or without an equal increase later in the rental period to make up for it.
  • Permanent rent reduction: Lower rent for the term of the lease.
  • Other costs: You may also be able to negotiate to reduce or remove related costs, such as building maintenance, utilities, and more.
  • Permission to sublease: You may need to have the landlord’s permission to sublease part of your space, but this can be a very effective solution for you both.

Some options you can offer in return for lowered rent or other changes include:

  • Profit-sharing
  • Lengthen the lease term
  • Repay the reduction in the future, potentially with interest
  • Offer reduced goods and services to the landlord

Communicate Your Situation

You have a better chance of getting to a new agreement with your landlord if they understand your financial situation and why your business needs rent to be lowered. Or, if you can communicate the comparative cost of renting from someone else in the area, with solid research, you will also seem more reasonable, and your landlord will be more likely to strike a deal with you.

Particularly if you are asking for only a temporary reduction or offering a profit-sharing exchange, your landlord may want to know your plan to help your business recover from its current financial situation. Come to your negotiation prepared with a solid roadmap for how you’ll get things back on track. If your problem is natural seasonality in your business, demonstrate how you’ll handle this seasonality next year.

Receive and Consider Counter-Offers

Renegotiating a commercial lease is not a small matter, and it is likely that your landlord will return to you later with a counter-offer that is more favorable for them. If you are facing an overall economic depression that has resulted in your own financial troubles, it is possible that your landlord is facing renegotiation from several of their tenants and is facing hardship of their own. Renegotiate with care, as if your landlord loses too much, they may end up selling the property outright.