Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 796 votes
A lot of leases have multiple 5 year option clauses but are they really necessary from a landlord perspective? It seems like the only benefit is to the tenant that can lock in their option rates for the long term. Loan officers don't care unless they see the option exercised. All the loan officer cares about is their commitment to the property.
A lot of leases have multiple 5 year option clauses but are they really necessary from a landlord perspective? It seems like the only benefit is to the tenant that can lock in their option rates for the long term. Loan officers don't care unless they see the option exercised. All the loan officer cares about is their commitment to the property.
If I'm the LL I want the 5 year option ONLY if the option is on the Tenant AND LL. If I'm the Tenant I want the option as a Tenant option only so I have control over my business location and operations. We do leases every day around this concept.
The reason for options is so that if you both want to extend the notification process is simple and you're not reinventing the wheel by drafting and negotiating a brand new lease if everything is working.
If the option is on the Tenant AND LL then that allows you to not renew and if you want you could keep the same Tenant AND negotiate better lease terms if the market/economy dictate.
A lot of leases have multiple 5 year option clauses but are they really necessary from a landlord perspective? It seems like the only benefit is to the tenant that can lock in their option rates for the long term. Loan officers don't care unless they see the option exercised. All the loan officer cares about is their commitment to the property.
If I'm the LL I want the 5 year option ONLY if the option is on the Tenant AND LL. If I'm the Tenant I want the option as a Tenant option only so I have control over my business location and operations. We do leases every day around this concept.
The reason for options is so that if you both want to extend the notification process is simple and you're not reinventing the wheel by drafting and negotiating a brand new lease if everything is working.
If the option is on the Tenant AND LL then that allows you to not renew and if you want you could keep the same Tenant AND negotiate better lease terms if the market/economy dictate.
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
2y
@John M. we generally look to get 10 year leases with two, 5 year options. Our clients are usually putting pretty high dollar numbers into build-outs so we want the right to keep the spaces for the long term. We are generally working with retail leases and don't generally get any lease rates locked in, they are usually "market rate" on the options.