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LETS GET DOWN TO BUSINESS.

Question :
HiMy name is Ben, who is the owner of small company in Auckland. Our business is international education agent mainly for Japanese market. As you know that our industry depends on NZ border which still remains close.However, our main concern is the high rental cost for our office in the middle of Auckland central. We still have almost 1 year term remaining to terminate. We asked the building owner to terminate our contract with 2 months rental penalty. but no answer for a long time.We would like to seek some information or good ideas to terminate our contract term and move out current office as soon as possible to service our business.I would really appreciate it if you could help our situation.Kind regardsBen Tokunaga

Question submitted 15/02/21 @ 02:22pm
Industry: Property
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    Hi Ben, I appreciate the position you are in.

    I assume you wish to exit your lease to manage your cashflow. Your options will be determined by the terms of your lease. Without reviewing your lease, your possible options are:

    1. Negotiate an early surrender of your lease – I note your landlord has been reluctant to engage – I suggest proactively following this up
    2. Seek replacement tenants who you can assign your lease to – engage a real estate agent and list your premises (your landlord will be more willing to surrender your lease if you have a replacement tenant)
    3. Seek third parties to sublet or co-share the space to reduce your occupation costs in the interim

    All the above options will require engagement with you landlord. However, a proactive and engaging approach combined with a potential solution eg A Landlord is more likely to accept a surrender of your lease if you have found them a potential replacement tenant.

    Your offer of a 2 mth surrender payment plus a rent free period from the landlord (which they would incur in 12 months) may attract a potential replacement tenant.

    Suggest you review your lease to see what potential options there are, meet with your landlord to discuss, and list your premises for lease.

    I trust the above helps.

    regards
    Marcus Bosch

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    Marcus has hit the nail on the head here Ben. His response summarises the options you have at your disposal. Incentivising potential tenants with an abatement on the rent, or prior access, or possible fit-out/furniture etc. are all good carrots to dangle. Don’t be afraid to provide your preferred agent/s with funds to further promote or advertise your property through online and social platforms. You may instead prefer to promote the property yourself, but be aggressive on both the promoting of your tenancy and the price you would accept to surrender the lease in terms of a surrender fee/agency fees/landlord legal fees/all of the above. Keep close communication with your landlord, I suspect the radio silence is your landlord also knows that a replacement tenant may be hard to find and would prefer to retain the status quo scenario of you fulfilling your lease obligations. Your Landlord cannot unreasonably withhold a new tenant from taking over all, or part of the space so you may look to even carve up your tenancy into smaller offerings in the hope of attracting more tenants, or even a smaller subtenant to help subsidise your lease commitments. Failing this, speak with your solicitor and have them review the lease to check how water tight it is. All the best.

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