With COVID-19 dramatically impacting business, you’re likely looking to cut costs for your company, especially as a small business or startup. Office leases are one of companies’ largest expenses, and if your whole team is working from home with no clear end in sight, you may be wondering what to do about your lease. You’re not alone.
Some of the common questions we’ve gotten at Truss include:
- Can I get out of my lease/membership agreement that I just signed?
- Can I renegotiate my current lease/membership agreement?
- Will my property owner reduce my rent cost/give me free rent?
The short answer is, it may be possible to get office rent relief in some form.
Talk to Your Landlord About Your Office Lease
It may be possible to renegotiate your lease and get some rent relief, but this will only have a chance of happening if you talk to your landlord.
What Questions Should I Be Prepared to Answer about My Lease?
You will need to make a detailed case for why you and your business need this specific relief. After all, landlords are in a tough situation too, and may even be asking for their own relief, like reduced or suspended mortgage payments. Being honest about the state of your business when you make your case and seeing your landlord as a partner rather than an adversary can go a long way.
You should be prepared to answer the following questions about your business:
- Why are you seeking rent relief? Are sales down? Have “shelter-in-place” policies impacted your operation? Is venture funding on ice? What is your company’s burn rate and how much runway do you have? How much time have you salvaged by reducing expenses?
- How else are you reducing expenses? You should not rely on your landlord to be the sole cost-cutter for your business. They want to see that you have a survival plan beyond this ask. Be specific about what you’re doing, and they may be more inclined to help. They may even be motivated to provide rent relief and/or allow you to lease a smaller space in the building. If you lease an office in a coworking space, this is easier to accommodate than a suite in a traditional office building
- What other assistance are you seeking? Demonstrating your resolve in keeping the company afloat by seeking all possible relief channels will motivate your landlord to assist rather than lead them to assume that other sources of funds will carry the load for your business. Your business may want to consider an SBA Disaster Recovery Loan. The SBA Disaster Recovery loans are available for small businesses and non-profits to replace short-term lost revenue and can be used to pay debt, payroll, accounts payable and other bills.
What Can I Request When I Talk to My Landlord?
You have a few options when seeking rent relief from your landlord.
- Ask for 1 or more months of free rent
- Ask for 1 or more months of free rent, but extend the lease by the number of months you’re seeking free rent
- Ask for reduced rent
- Ask for reduced rent and backload the rest
- Request lease/license termination and negotiation termination fee
You should have a plan of what you’re going to ask for based on your specific business needs. Your request should be realistic and mindful of your situation as well as theirs. Remember to see them as a partner rather than an adversary.
You Don’t Have to Figure Out How to Deal with Your Office Leasing Issues Alone
This is a difficult time for many of us, and we at Truss want to lend a hand. Our brokers are here to help you navigate your leasing situation free of charge, no matter what your concern is. If your business is located in one of our cities, see below to book time with one of our brokers to talk about your leasing situation. They can help you understand your current lease terms, figure out how much and what type of rent relief to ask for, and how to make your case. We’re happy to provide this service free of charge for all – Truss users or not.
- Chicago: Nicole Weldon, Austin Zimmerman
- Los Angeles: Sam Devorris, Chris Gunderson
- Washington, DC: Cam Kostyack
What Other Office-Leasing Related Questions Do You Want Us to Address?
What other questions do you have about office leasing? Send them our way (email@example.com) and we’ll do our best to get information out there.