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07/15/2013

Potential Property Pitfalls at Lease Renewal Time

About to sign a new lease? Avoid unnecessary headaches and expense with these tips

By Barry R. Katz

 
About to renew your lease? Avoid these pitfalls.

Most leases are complicated with numerous provisions that will impact operations.  If you’re about to renew your lease or are working with a new real estate management agent, look out for these lease provisions that might cause issues or problems.  While no two situations are the same, remember that in the existing market most landlords have great incentive to keep an existing tenant.

Do You Want to Stay? 
The threshold question for a facilities manager/ownership is whether you want to renew.  The answer to this question involves a combination of factors: 

  1. Do you need less or more space?
  2. Have any improvements paid by the tenant been significantly depreciated?
  3. What are the costs of moving your company to another location?
  4. What is the availability of other leasing options in the target geographic area?

While your landlord should be motivated to keep an existing tenant, other competing landlords will also grant incentives to lure a new tenant.

Term and Rent
Make sure the lease reflects the business deal as stated to you.  Double-check the commencement and expiration dates and the stated rent, particularly annual rent increases.

Option to Extend Term
The notice of renewal must be delivered in a timely manner, as this is a date that you do not want to miss.  In addition, the lease will have specific provisions as to how notice of renewal needs to be delivered; usually by certified mail or by personal delivery.  These provisions are strictly interpreted by courts. 

It is important to pay attention to these provisions.  For example, several years ago this author became aware of a tenant that thought it needed to give notice of renewal no later than six months prior to expiration of the lease when it turned out that 270 days (nine months) advance written notice was required.  The landlord used this mistake to renegotiate some of the business terms of the renewal.


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Our mission is to help our customers manage their buildings' energy costs, improve reliability, and enhance performance while having a positive impact on the environment.
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04/24/2014

Explore real-time green building data through the newly launched data visualization resource from the USGBC.

04/23/2014

A key part to curbing emissions is working with local and city officials, tenants, and other groups to help make entire communities more sustainable. BOMA International shares the following strategies for greening your facility and community.

04/21/2014

Lighting fixes target the bottom line.

04/16/2014

The U.S. Army plans to start development of a solar array that will provide about 25% of the annual installation electricity requirement of Fort Huachuca, Arizona.

04/15/2014

The EPA's annual greenhouse gas emissions report is now available.

04/14/2014

Are you what some would call a “climate-change denier”? If so, you'll want to read this.

04/10/2014
Los Angeles has remained the top city for ENERGY STAR certified building since 2008, while Washington, D.C. continues to hold onto second place for the fifth consecutive year, according to a new list released by the EPA.
04/09/2014
Green construction has grown massively over a short period of time.
04/07/2014
Field demonstrations of newly proven energy-efficient technologies are yielding valuable results for the U.S. Navy, helping it meet energy goals.
04/03/2014
Building owners in Chicago now have more options when it comes to getting their building energy data verified.
04/01/2014
According to a new report from Eaton, such outages are up 15% in 2013 over 2012 and over half of those surveyed believe that downtime could have been prevented.
03/31/2014
The newly revised ANSI/ASHRAE Standard 105-2014, Standard Methods of Determining, Expressing, and Comparing Building Energy Performance and Greenhouse Gas Emissions, aims to provide a consistent method of measuring, expressing, and comparing the energy performance of buildings.
03/27/2014
Facility managers face an every expanding array of sustainability choices and challenges, but for the next generation of FMs, green practices could be second nature as sustainability literacy enters the K-12 school system.
03/25/2014
While the economic recession explains the decline in sales in 2008 and 2009, it is much less clear why sales have continued to fall.
03/24/2014
University of Washington (UW) scientists have built the thinnest known LED that can be used as a source of light energy in electronics.
03/21/2014
Mississippi Governor Phil Bryant signed Senate Bill 2378 into law, effectively enacting the state’s first building code.
03/19/2014
In an attempt to improve building energy performance, the DOE’s National Renewable Energy Laboratory has released a web-based tool called the Technology Performance Exchange, or TPEx.
03/18/2014
Could green building practices pose unanticipated life-safety hazards?
03/13/2014
Worried about workplace violence in your facility? Researchers have discovered that “mindfully observing” high-risk employees can avert danger and workplace violence.
03/11/2014
Through the DOE’s Building Energy Codes Program, every dollar the DOE has spent on building energy codes over the past two decades has resulted in $400 in energy cost savings.
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