11/07/2024
$2.1M Lease Agreement Secured.
True story:
1.5 year before commercial tenant plans to move out, landlord approaches tenant to renew their 5 year lease now, so in 1.5 years from now it continues on.
Tenant sees leverage, and asks an enormous amount of Tenant Improvements now (not at renewal, but now) from landlord, to even potentially consider renewing their lease. They use the fact the office market in Ottawa is soft to make high demands, and threatnen to move out at end of lease. The landlord holds on and says he will do the Tenant Improvements (TI) after a new lease is signed.
There are a few items that need repairs, and as per lease contract, the tenant is responsible for paying for them. Tenant begrudgingly does the minor repairs.
The Tenant gives his 12 month notice, for intent to vacate at the end of the lease. Landlord sweats, stresses, panics, as his mortgage renewal is now, and no new lease renewal, and a vacating tenant.
BAD scenario.
Tenant advises landlord that they started to look for a new office space.
Landlord, rolls their sleeves, create some marketing material, and begins advertising the office space, for a large single tenant occupier. The market is limited in supply for these types of tenants, but nonetheless, there is a bit of interest.
Landlord starts to notify tenant of showing requests, and performs 2 showing visits.
Meanwhile, tenant realizes there is no other office property that meets their criteria, as best as the current space they occupy.
So Tenant slides a word to the Landlord they might decide to stay in the property, after all, but that they would like to have their rent reduced by 20% to match the approx 15% office market rent decrease.
The landlord prepares 3 lease renewal options with varying Tenant Improvements, all of them at a higher price then what the current tenant paid.
Tenant frustrated woth the options, they don't want to sign a renewal and threathens to still move out.
Landlord... cont'd