by Bethany Libby

It is easy for a business owner to sign a lease and think, "That's it, I am tied to these terms for the next five or ten years." However, many astute tenants looking to maximize their returns, but also securing their location will look at other options. One opportunity to save your company money every month is called a Blend and Extend.

You may have noticed more vacancies in and around your business. According to a CoStar analysis, many locations have seen a 12.5% or even higher rental rate drop. Inflation, interest rates and aftereffects of Covid have put both landlords and retail tenants in a rough spot. In this economy landlords are wanting to work with strong tenants in order to keep vacancy rates at a minimum.

One method that we have strategically used to help our clients is The Blend and Extend option. Essentially the tenant agrees to extend their lease while locking in a blended rental rate. This is typically a little lower than what they are currently paying, but higher than what market rate would be. The tenant wins because they secure their space while saving money on rent each month. The landlord wins because an extended term with a proven tenant means less risk of holding a vacancy, and they should make up the rental concession at the end of the term when the economy should be better.

By utilizing this tactic, a current tenant can take advantage of lower market rental rates now, but also offer up something to a landlord to entice them to agree to the concession. At Commercial Brokers International, we continue to advise our clients as to the best strategies to negotiate their current, or new leases, and help to negotiate the best terms on behalf of their business. In a market such as this, we want to remind landlords and shop owners alike that there are many options available to them to keep a proven tenant in place, while also giving them immediate savings. If structured correctly, it can be a win-win for everyone involved.

If you are a tenant that is happy with your current space, have more than two years left on your lease and would like to learn more about options surrounding the restructuring of a lease give me a call at 310.943.8538. You can also email or DM me for more information about rental rates in your specific neighborhood.

Happy New Year and Happy New Lease Terms! May 2024 be a year of success for you and your business:)