LEASE AGREEMENT REFERENCE GUIDE 1600: 12 OF THE MOST EXPENSIVE LEASING MISTAKES A TENANT CAN MAKE $39.95
12 OF THE MOST EXPENSIVE LEASING MISTAKES A TENANT CAN MAKE--EXCERPT
Item 4: For renewal options with market rent, negotiate a more favorable definition of market rental by including pro-tenant factors to be considered when the rent is determined.
The following clause defines market rental and includes items that should benefit the tenant (e.g., the cost to the landlord of necessary tenant improvements, rental abatements, takeover and assumption costs, and leasing commissions that would be required for the landlord to make a deal with a new tenant).
Pro-Tenant Language For Market Rental Determination
The Minimum Monthly Rent for each Renewal Term shall be equal to the Prevailing Rental Rate determined as of the first day of each Renewal Term. For purposes hereof, the term “Prevailing Rental Rate” shall mean that rate charged for space of comparable size and condition in comparable office buildings in the City, under the same terms, conditions and obligations contained in this Lease (exclusive of the amount of the Minimum Monthly Rent obligation), for a term of five (5) years and subject to the remaining Renewal Options, to a single user tenant having a net worth substantial similar to Tenant, assuming that (i) Landlord has had a reasonable time to locate a tenant who rents with knowledge of the rental market at that time, and (ii) neither Landlord nor such tenant is under any compulsion to rent, and taking into consideration any relevant factors and considerations in the market place at the time of renewal, including, without limitation:
(i) the location, quality, age and condition of the Building;
(ii) that the Premises will be offered for rent in their “as is” condition on the first day of the applicable Renewal Term with all existing tenant improvements in place;
(iii) the amount per rentable square foot of tenant improvements which Landlord would be required to spend to prepare the Premises for occupancy by a new tenant;
(iv) any and all takeover and/or assumption costs which would have to be incurred by Landlord for a new tenant;
(v) a standard brokerage commission which Landlord would incur if the Premises were leased to a new tenant; and
(vi) any other respective costs and benefits to Landlord and Tenant by virtue of the fact that the Lease will be renewed pursuant to the terms hereof.