Why You Absolutely Need a Broker for Your Office Lease Renewal

Many tenants mistakenly believe they can negotiate a lease renewal directly with their landlord. They might think their good relationship will ensure a fair deal, or perhaps they see themselves as excellent negotiators who don’t need help. While you might be a great negotiator in general, when it comes to your office lease renewal, you’re undoubtedly leaving money on the table if you go it alone.

The key reason? You have no leverage.

Think of it this way: Which approach will get you a better raise? Going to your boss and simply asking for more money, or telling your boss you’ve been offered more at another company and would like them to match it? The answer is obvious.

It’s the same in real estate. If you approach your landlord without a broker, they’ll know you’re likely to renew, giving them little incentive to offer you the best terms. Only a broker can create a credible threat of you leaving. This isn’t a new concept; professional athletes rely on agents to test the market when their contracts are up for the very same reason.

Landlords’ biggest single cost is re-tenanting a space. Between the downtime of finding a new tenant, the concessions of a new lease, build-out time, and other transaction costs, landlords are highly motivated to retain existing tenants. An experienced broker understands the market and can analyze a landlord’s savings in renewing an existing tenant. This puts them in a strong position to extract the most value from the landlord during your renewal.

Additional Advantages of Using a Broker

An experienced broker will also have access to market comparables and data, showing you what other new deals in your building and surrounding areas have been. Why wouldn’t you want this crucial information at your fingertips?

Beware of Hidden Costs

Here’s a common trick many landlords use: They might tell a renewing tenant they’ll lower the rent to market but conveniently fail to mention they are not resetting the real estate tax base year. This means instead of starting fresh with $0 in taxes, you continue to pay the accumulated amount, which can be a significant yearly figure. A broker will spot this immediately.

Don’t Worry About the Commission

Finally, you might hear that using a broker means the landlord has to pay a commission, which will ultimately “cost you.” Of course, the landlord will say this – they don’t want a broker advising you and showing you competitive spaces! What they don’t tell you is that a commission is being paid no matter what. The landlord often has their own agent who receives a fee, or the landlord might even receive a commission themselves for managing the property.

The commission should be the least of your worries. Your focus should be on making the best deal and educating yourself about the market.

I would be delighted to discuss your renewal or any other real estate requirement you may have 

Feel free to contact me:

Paul Walker 212-984-7117 Paul.Walker@cbre.com Paul Walker | LinkedIn