Seeking a Commercial Rent Reduction

Commercial rent is one of your biggest monthly expenses.  If you are experiencing loss of revenues, getting your rent reduced is crucial for staying in business.  Some landlords are more cooperative in rent relief situations than others.  It costs the landlord money to replace a tenant.  The landlord has to advertise the property, pay a broker commission and make repairs. The property may sit vacant for months causing the landlord lost revenues.  Most landlords have an incentive to negotiate with a tenant that is requesting a rent reduction if the tenant has proved themselves to be a good established tenant that pays their rent on time.   Other factors that play an important role in whether or not your landlord will agree to a rent reduction are:

• If you at the end of your lease term
• If the space is customized to your business use and it would be difficult to find another tenant, or it could cost the landlord more to make improvements for a new tenant
• If other businesses in your area are going out of business because of a recession, your landlord will be more sympathetic to negotiating a rent reduction
• If market rents have dictated reduced rents to new tenants, you have much better chance of getting your landlord to agree to a rent reduction. 

So it may be in the best interests of both you and your landlord to work out a rent reduction.  The only way to find out if your landlord will agree to a rent reduction is to ask.  The worst that can happen is your landlord says no. Then at least you can decide if you want to find another location when your lease expires or break your lease if you feel it is financially beneficial. Before you make any decisions, you should speak to a real estate attorney to find out your legal rights and obligations under your commercial lease. 

Landlord Fails to Make Repairs 

If your landlord fails to make repairs, you should check your lease provisions to see if there are any protections for you such as you making the repairs and deducting the amount from your rent. You may be able to seek a temporary rent reduction during the time the premises were defective and you lost revenues as a result.  

Talk to an Attorney 

A commercial real estate attorney can help you negotiate a rent reduction with your landlord. The attorney can represent you in any landlord/tenant disputes as well. The attorney is an expert in landlord/tenant laws.