Q & A: The Key is Leverage

When I signed the initial lease at my current location, the landlord required an additional security deposit of $12,000.00 as a compromise to a personal guarantee. I am now 3 ½ years in and plan on renewing at the end of my term. I pay all my bills in full and on time, is there a way to get any of that $12,000.00 back?

The key is leverage: your leverage is the possibility that you will not renew your lease. You have to make him aware that there are other alternatives besides your current location and even though you are very satisfied with where you are, economic considerations are very important in today’s business climate. My suggestion is to begin an early renewal and include in that negotiation everything you want (as if it were a new lease) i.e., security deposit, lower rate, expansion option at defined rates and TI, etc. Your issue is how long of an extended term you can live with (3 or 5 years). Obviously, that will also determine the additional concessions you can demand. We have been working with many clients in similar situations. You might consider beginning the process sooner than later because we have found that every month inside 18-24 months from lease expiration, your leverage begins to drop. You are an excellent tenant who pays all your bills on time; any landlord would die to have you.

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