How Best to Approach Lease Renewal with Corporate Tenant
I am a building owner with a single corporate retail tenant.  This will be my first lease renewal with this tenant.  The tenant currently has 1 year left on their lease term with a 5 year term option.  The lease states that they only need to give notice of renewal/non-renewal with 120 days remaining.  I obviously would like to get an answer one way or another sooner so I can either refinance at current rates, or prepare for marketing/releasing.

I have tried reaching out to the corporate contact in charge of all lease negotiations both through email and voicemail but have not heard anything back in response.  I have heard through multiple brokers that this particular tenant likes to play hardball and likes to see how desperate/vulnerable the building owners are to be able to squeeze them with terms.

Any advice on how to approach to get an answer without putting myself in a bad spot?  Would offering a small incentive to renew earlier (a month or two free rent) for a limited time be enough for them to begin discussions?  Should I just drop my attempts until the required notice time?  Thanks.
[{"id": "i3x6tcc", "text": "If they aren\u2019t responding, don\u2019t waste your time. Lease negotiations go back and forth frequently. Wait until a few months before their notice and begin looking for other offers and post the space on loopnet. Loopnet will be posted to costar which their real estate team may see. The best leverage in these scenarios is knowing market rate for the space and having an understanding of what your other options are. Don\u2019t go to market too soon that can make brokers put you on the back burner. There needs to be a reason for them to be called to action.", "replies": [{"id": "i3xc34n", "text": "That was the direction I was leaning but the posting a listing as the notice time period approaches is a great a idea.  Thanks.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i3xazqh", "text": "Wanting to refi early puts you in a bad spot and IMHO you will eat more in lost rent by showing those cards than you will save in interest (even understanding where rates are going).\nBeyond that, I agree with the other comment that there's not move you can do right now to move them. \n\nNow if you are trying to renew them without a broker fee, I suggest at 150 days you reach back out and state you've got 30 days left to strike the best deal, bc at 120 days you'll market the space with a broker and your costs go up.\nObviously strategy depends on likelihood of them staying and where the extension option is relative to market.", "replies": [{"id": "i3xcg4i", "text": "I agree.  I was getting conflicting information/suggestions between different brokers.  One was saying push now and make an offer since earlier renewal is more valuable (lower rates/longer term).  I will wait and then make a push closer to the 120 day period.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i3xm2d7", "text": "Do you see their financials or have an idea of how the location does for them in relation to their other locations? Some understanding of this will at least give you a temp reading on the likelyhood of them executing their option and the position they will be negotiating from", "replies": [{"id": "i3yr8qa", "text": "How do you get a tenant to release their financials to you?", "replies": [{"id": "i3z2cqm", "text": "You put it in the lease", "replies": [], "depth": 3}], "depth": 2}, {"id": "i3z59r8", "text": "This. I always start here.  If their culture is to manipulate landlords, start with their gross sales. If they\u2019re national-credit, real estate costs are often secondary or tertiary considerations. If it\u2019s a good unit for them, they\u2019re not going to endure a relocation to save a few bucks PSF. Knowing their sales, especially the trend, can at least give you a hint at where they\u2019re coming from. \n\nIs their renewal option a stated-rate option (e.g. does it specify a rate)?  Or, is their option at \u201cfair market value?\u201d\n\nAlso, I never contact a tenant before the option notice date. It\u2019s their option. Let them track it. You\u2019ll be in a better negotiating position if you go silent. I know that may not fit your style, but a soon-to-expire lease is usually better for the landlord from a negotiating perspective. \n\nSource:  privately-held retail landlord who negotiates multiple retail renewals weekly.", "replies": [{"id": "i7gfxzs", "text": "I have a national tenant and the renewal states atleast 90 days notice (which is nothing) and that would be at the end of next month, I feel I should reach out now once I find who the contact is, thoughts?", "replies": [{"id": "i7go69h", "text": "\u201cIt depends\u201d is the answer to most questions. Is this a single-tenant asset or multi-tenant?  How does their current rate compare to the market?  Do you want to keep them?  What\u2019s their credit?  \n\nIn general, I try to let options expire before I contact a tenant about a renewal. There may be a reason to contact them before, like maybe their option rate is attractive to you. But, if the rate is above market, there\u2019s a chance they won\u2019t exercise it and will try to just negotiate a new rate. I can think of a thousand different considerations.", "replies": [{"id": "i7gq7vh", "text": "Single tenant, great credit, national we\u2019ve had them for 10 years. I\u2019d like to keep them, the renewal rate is already in the lease but we need to know if I should get ready to put it on the market. \u201cMinimum of 90 day notice\u201d is just not enough and very vague.", "replies": [{"id": "i7grfp2", "text": "If you have a valid concern about them vacating, then contact them. If you think they\u2019re likely to renew, then I\u2019d wait. You\u2019ll have more leverage on a renewal if you wait. \n\nAnother consideration is the reason why they haven\u2019t already contacted you. Not all nationals track real estate very well. Some do. The ones who do will contact you well in advance (or get their third-party broker if they outsource) to lock down a unit they want to keep.", "replies": [{"id": "i7gsfjn", "text": "My valid concern is I have other things vacant and don\u2019t want more lol I don\u2019t know what they\u2019re doing.\n\nYou\u2019re correct about them not contacting us yet but they are corporate and I\u2019m guessing by the book, yet it is \u201catleast 90 days\u201d they may wait until that 90 day point but I don\u2019t want to scramble finding a tenant for an 8k+ sq ft property at the last minute.", "replies": [{"id": "i7gsp1h", "text": "Good luck. I hope they respond.", "replies": [{"id": "i7gu71u", "text": "I do see they\u2019re hiring so that\u2019s a big plus, I\u2019ll wait another week or so and see if they reach out\u2026thanks!", "replies": [], "depth": 9}, {"id": "i7gu8hp", "text": "I do see they\u2019re hiring so that\u2019s a big plus, I\u2019ll wait another week or so and see if they reach out\u2026thanks!", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i3y1x62", "text": "You sound *incredibly* eager.\n\n*\"Any advice on how to approach to get an answer without putting myself in a bad spot?\"*\n\n(Stop talking).", "replies": [{"id": "i3y5ib7", "text": "I'm of the philosophy that it is better to be proactive than reactive.  However, it seems that patience in this case is the best course of action.", "replies": [{"id": "i3yr7rc", "text": "&gt;*it it is better to be proactive than reactive*\n\nI'm confident the Russian troops who recently dug all those ditches at Chernobyl would readily concede that point.\n\n*(As well as what appears to be your final conclusion).*", "replies": [], "depth": 3}, {"id": "i40wn1f", "text": "Be proactive about what might happen if they go. \n\nWait until the notice period, contact them to request renewal discussions and in the same contact let them know you will be marketing the property unless they are interested to discuss a renewal then you may hold off. \nPrior to the notice period you may get one or two local agents to walk through for an appraisal but that may be a bit off putting, so may be better to wait until you make first contact and include that a few agents will be coming through. You\u2019ll know better as you should have some understanding of what the tenants like. \n\nIf they want to muck around then utilise then last 120 days as time to find a tenant and mitigate your downtime. Also use it as time to know their makegood clause under the lease so you can ensure you and they know their responsibilities in full.", "replies": [{"id": "i417m12", "text": "Great advice! I hate to wait and be unprepared for an outcome either way. Thank you.", "replies": [], "depth": 4}], "depth": 3}, {"id": "i45v63k", "text": "&gt;I'm of the philosophy that it is better to be proactive than reactive. \n\nThat logic needs to be applied based on situational.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i3zwggn", "text": "120 days is a ridiculously short window for notice.  But that's not the end of the world.\n\nRe-fi after you lock them in on their (or the next) deal, because you have a ton of leverage.\n\nHave your favorite broker keep an eye out for you for the next tenant.  If they're not talking to you, and have the leverage on the notice, shop the space off market.\n\nGives you an immediate backfill and \"market rate\" if that is how it is written in your lease. \n\nGo get 'em.  Hire a broker.", "replies": [], "depth": 1}, {"id": "i45v0q7", "text": "1. 120 days our is too late.  Next lease require 12-16 months out.  Standard time for our leases.\n2. If the lease stipulates Tenant has 120 days.  You need to wait for 120 days.  \n3. Offering 'incentives' will not impact their decision to extend the lease.  They already know if they will execute the option or not.", "replies": [], "depth": 1}]