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In a suburb 30 miles north of New York City what is the

going rate or reasonable rate...
In a suburb 30 miles north of New York City what is the going rate or reasonable rate for commercial office space annual lease increases? not including any TAX/CAM increases. I am negotiating a lease renewal with a tenant who has leased for the last ten years, during that time they paid 3% annual increases. The market has changed and is lower now. the local average is $25-$27 a sq. ft. They are currently paying $27 sq. ft. The tenant wants to renew for 5 years with zero increase ( they will pay any TAX/CAM increases) and they want a 5-year option to renew with only one 3% increase at time of 2nd renewal, meaning in a 10 year period the rent can only go up 3%. so in 5 years and for the next 5 years the sq. ft rent will be $27.81 per sq. ft. They are great tenant but this does not seem fair or practical. Can you please give your opinion and suggestions.
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Answered in 17 hours by:
11/22/2017
bkb1956
bkb1956, Finance Enthusiast
Category: Finance
Satisfied Customers: 4,203
Experience: IRS Enrolled Agent, 20+ years of experience in tax preparation with associated finance experience.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Based on the information you provided, this is not really an issue of finding out what the going/reasonable rate of annual lease increases for commercial office space, but rather, how much you are willing to negotiate with your tenant.

The facts are that the present rent is at the top level of what the current market dictates, you have a great tenant, and the tenant wants to renew the lease but does not want an increase/one increase in 10 years.

It does not seem practical from your business standpoint that there should not be an increase/one 3% increase in 10 years. You are in business to make money.

Perhaps a smaller percentage of increase--1% or 2%--every two years should be considered.

Please let me know your thoughts.

Thank you and best regards,

Barb

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bkb1956
bkb1956, Finance Enthusiast
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Experience: IRS Enrolled Agent, 20+ years of experience in tax preparation with associated finance experience.
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