Why are options important for a tenant?

Why are options important for a  tenant?

If you are a retail or an office tenant leasing space and you are in the process of renewing your lease agreement make sure you understand how important an “option to renew” in your lease is.   Most business owners do not understand that they can control the space  they rent with negotiating these “options to renew”.  It ultimately gives you long term control of the space(like ownership), rent control and if the terms are negotiated right, limits your liability for the balance of the rent should you need to close the business.   

Here are some top deal points you may want to negotiate before finalizing your lease agreement.

  1. How many options can you get?  1(5)year,  2(3) year, 4(2) years?
  2. What are the rents for those periods of time?   Fixed? 3% increases annually? CPI?
  3. What tenant improvement allowance will the landlord give you prior to renewing?
  4. How long do you have to notify the landlord prior to your term expiring that you want to renew? 3 months? 6 months? 9 months?

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