Rent Reduction Variables

More times than tenants want to admit, they open a business and it does not generate the sales volume they projected. Frequently it is because competition was too intense or they selected a poor location, or the products or services they are selling are not desired by the demographic profile of the customers that surround the store. If you have given your business a reasonable length of time to be successful and are unable to pay your bills you may want to approach your landlord with a rent reduction request. If your landlord has few or no vacancies in his shopping center, he may be receptive to negotiating an early lease termination. By doing this the landlord could charge the current market rent which may exceed what you are currently obligated to pay and a new replacement tenant could pay more. But, if your landlord has a lot of vacancies, he probably doesn’t want you to leave and may be much more flexible than you think to help you remain in the center. 

Having a prepared business plan, a recap of your sales history and expenses to date will help get your landlord to understand your current business situation. All of the variables below will contribute to your chances in securing a rent reduction.

•  Length of time remaining on the lease.
•   Current sales trend. Are sales trending up or down.?
•  Number of vacancies in the center.
•  Entity who signed the lease.
•   Assets of entity who signed the lease.
•  Have you stopped paying rent?
•  Profit/Loss statement generated and shared with landlord.
•  Rent can be abated, deferred and laid in across the balance of the term?  Deferred rent will only be viable if you
     have a plan and expectation that sales will dramatically increase in the future  and how this will happen.

Created with