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A commercial tenant doesn’t have to renew under the same terms

On Behalf of | Oct 27, 2019 | Landlord / Tenant |

Finding the right retail space here in Orange County can take a long time. Once a commercial tenant finds it, a lease is signed for a specified period of time after negotiating its terms. One of those terms may have been the option to renew.

Some commercial tenants believe that the option to renew means signing a new lease with the same terms as before. However, that is not always the case. When it comes to commercial leases, nearly everything can be negotiated, and that includes the terms of a renewal lease.

During the term of the first lease, a lot can change. Conducting some research regarding the current markets, the other tenants on the property and other issues could help secure better terms the next time around. For instance, if the original lease did not contain a clause wherein the landlord could not rent space on the same property to a competing business, this could be added at renewal time.

Perhaps an Orange County small business tenant fears an anchor tenant will vacate the premises. The small business could request a clause in the new lease indicating that the lease may be broken without consequence or the landlord provides a reduction in rent if that anchor tenant leaves. This could mitigate any loss of business due to the vacation of the anchor tenant.

A commercial tenant could review the entire lease and determine those terms that could require more negotiation when it comes time for renewal. Obtaining the best possible terms could help increase the success of the business. Some help would probably be worthwhile in order to gather all the relevant information needed prior to sitting down with the landlord.