Bargaining Factors
Market conditions at the time of expiration will exert a strong influence over the concessions or terms granted under the new lease. In general, bargaining will center on
Concessions
The actual negotiation of lease renewals follows the same basic pattern as that used to obtain the initial rental agreement. If the general economic trend is inflationary, the Manager should probably push for an increased rental rate and a short-term lease or for an escalation clause. During a deflationary trend the Manager should favor a longer-term lease to secure the current higher rental rate for as long as possible. The Tenant usually will expect to receive a cheaper monthly rent in return for signing a longer lease at a fixed rent rate, in any type of economic conditions.
 Construction
The extent of repairs, alterations, or redecorating to be done will be influenced by market conditions, particularly by the competition in the market, and the Manager will have to be current on concessions being offered by competitors. If an alteration desired by a Tenant will become a permanent improvement to the property, the Manager may be able to charge it to a previously allocated fund, which could allow some flexibility in the rental rate.
Proper Notice
The Manager can avoid the irritation, inconvenience, and legal complications of a holdover tenancy by communicating with the Tenant well before the lease expires and discussing any changes desired by the Owner. Residential Tenants can be approached about 90 days before lease expiration, but commercial and industrial Tenants should be contacted from six months to a year before the expiration date.
