Smart organizations get proactive and contact landlords to renegotiate lease terms as the Covid-19 crisis continues. However, before you pick up the phone or send an email to your landlord, you may want to consider the following:
- Know your relationship with the landlord. Before you ask for lease forgiveness, check with your account manager for a status. For example, are rent payments current, service tickets are active/updated/or completed, and the primary contact.
- Know the remaining terms of your lease(es). In other words, how much of the lease terms have been met? Each lease must be treated on a case-by-case basis. It’s important to know rent paid and remaining rent liability. Leases with longer terms and higher rents have the best opportunity for renegotiating. Industry leaders advise tenants to renegotiate and negotiate shorter terms when possible.
- Know your lease options to sub-let vacant space or early terminate a lease. Many organizations look to consolidate office space and employees continue to work from home resulting in excess space. Remember, many organizations are in the same boat as you. Teaming with another organization to share space is advantageous for all parties.
- “Ready Answers”. Predict the landlord’s first response, hence the knee jerk reaction, and have a “ready” response when you ask for lease forgiveness. Practicing your conversation with peers will strengthen your communication with the landlord. Write down your “ready answers” and have them available for your call.
- Defer rent. Attempt to defer rent towards the end of the lease term. Similar to mortgages, banks are deferring up to 6 months and simply adding the mortgage to the end of the mortgage terms interest-free. Deferments may have a trickle-down effect. Many banks are willing to defer mortgages for landlords, hence the landlord may defer rent for a tenant.
Having intimate knowledge of your lease portfolio increases your chances for renegotiations. Do you have comprehensive knowledge of your lease portfolio? Perhaps we can help.
Ken Royce * Leaseology Inc * Board of Directors
ABOUT Leaseology Inc|
Leaseology, Inc is a North America-based business advisory services firm committed to accelerated marketplace adoption of digital technology, financial management innovation, and business operations practice excellence. These core competencies apply to real estate and equipment portfolios.
