Negotiating Lease Renewal in NJ for Small Retail Store
Hi all!

I am helping renew a small retail business for my parents in New Jersey with a triple net lease. The new terms are to increase the base rent by 10% and 3% for subsequent years for a total of 5 years. When they renewed 5 years ago, the city performed a tax assessment and the monthly tax as part of the rent went up by a significant amount. The landlord has turned over most communications through a property manager and I am not sure how much negotiating power we have. They didn't provide any accommodations during COVID.

I am proposing we counter with 3% increase in base and 2% yearly in subsequent rent each year. I'm reading that it is not a tenants market...is this a crazy proposal? Are there other tips such as capping tax/insurance that I should consider? Any tips would be very helpful!
[{"id": "ijh1nyq", "text": "I don\u2019t do leasing, but maybe showing some comparables that support your case could give you some leverage.", "replies": [], "depth": 1}, {"id": "ijh5l9p", "text": "Try to find out what the \"market rate\" for similar space is going for in your area. Maybe you are under by 10%, maybe more if you are coming off a long term lease? Find out through broker friend, loopnet, craigslist for small spaces, etc...\n\nFigure out the rough cost for you to move and do a buildout - LL has to do same calculus and would almost always keep an existing tenant rather than put a new one in. Your 3% proposal sounds reasonable on the surface but my guess is you are paying less than current market rent and LL wants to recoup last year's inflationary losses.\n\nIf there isn't much vacancy in town you will have much less leverage and you will have to take the deal if you want to stay open. Sounds like they aren't making you report sales nor going for an annual CPI increase which is to your benefit since CPI was almost 10% just since last year.", "replies": [], "depth": 1}, {"id": "ijh8535", "text": "Talk to a broker to determine what market rent is for your town/area. The 2.5% to 3% escalation is common. The 10% base increase might be too high or might just be the property manager bringing the rent up to market rate. So get a broker consult and, if necessary, an appraiser opinion. And try to get a 10 yr lease instead of 5 yr if your parents are planning to run the business longer term, it's better to lock in the rent for 10 yrs rather than reset again in 5.", "replies": [{"id": "iji0tfq", "text": "Thank you for this.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ijhiz9i", "text": "I don't think what you are proposing is crazy. You can also propose a 10% increase keeping the rent flat for the 5 years.", "replies": [{"id": "ijibep4", "text": "Thank yiu", "replies": [], "depth": 2}], "depth": 1}]