(Senior Vice President)
Intro: Welcome to another Berger Bite!
Michael Feuerman: Today, I'm going to discuss with you “Why is it important for a tenant to have renewal rights in a commercial lease?”. With a renewal right, a tenant has control over their space when your lease term is over, say, in three years, five years, ten years, you have the right to decide whether you stay or not under certain terms that were negotiated when you first signed your lease. It may be it, then, fair market terms, it might be a 3% above the prior year's rent. You may have a tenant improvement allowance the landlord has to pay in there, you might not, but you've determined ahead of time whether you can stay. If you don't have it and you want to stay, you might be forced out if someone's willing to pay more for the space. If another tenant has expansion needs, the landlord can push you out if it's a more important or larger tenant. Even if you don't think you need it upfront, it's very important to ask for it. I've seen a lot of tenants, at the end of their term, not able to find relocation space wanting to stay and they get pushed out. So, ask for it, negotiated upfront; negotiate as many of the terms as you can. And then if you don't need it later on, you don't have to use it or you can trade it for something else, but very important to have renewal rights.
Outro: Founded in 1998, Berger Commercial provides client-centric third-party brokerage, property management, and receivership services throughout the Dade, Broward, and Palm Beach counties. Contact us to experience the power of market knowledge.