Is there a maximum $ or % amount a landlord can rasie a commerical property when the lease is up for renewal?

I was just presented with a 20% increase.
In Leasing Property - Asked by Donna N. - Nov 20, 2012
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Answer(s)

Neil G.
Broker/Agent
Minot, ND

There are a few factors to take into consideration when raising rent. I normally base it upon the factors that lead me to raise the rent, determine if the amount seems reasonable or unrealistic. There is not one speciflc increase % that I use. I try to be as fair as possible when it comes to the same building with multiple tenants. One consideration is to escalate the percentage each year through the life of the contract. This way it seems to be more of a gradual expected increase maybe in 3-5% increments. Another way to collect any Taxes, Insurance or common area expenses is to make the leases Triple Net. Show the Tenant how the expenses affect the rent each year.
Just a few thoughts for what it's worth.
Neil Gush
Realtor
Coldwell Banker 1st Minot Realty Inc
219 Souith Main St.
Minot, ND 58701
701-852-0136

Nov 21, 2012
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Robert M.
Property/Asset Manager
Exeter, NH

No way to know if 20% is reasonable without looking at the market. You may want to ask a tenant rep leasing broker what comparable rents are, and even consider engaging a broker to help in negotiations. They'd also help evaluate proposals, so you get a better deal. Also, a broker may help negotiate some tenant renovation dollars for your site as well. Usually renewing tenants are able to get a break from market rates because they are saving the landlord money by avoiding vacancy and the cost of re-marketing & preparing the space for a new tenant.

Nov 21, 2012
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Wyatt P.
Property/Asset Manager
Irvine, CA

There's no maximum by law. The rental rate would normally be market driven, but typically a landlord realizes he can get a little more rent from an existing tenant who doesn't want to incur the cost of moving. There may be Options to Renew in your lease that set parameters if it was negotiated into the last renewal.

Nov 21, 2012
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Graeme S.
Broker/Agent
Chicago, IL

Your landlord will usually ask for the market rate--what everyone else is paying for NEW leases this year. I've seen 100% increases when tenants were on old 20 year leases that never kept up with inflation. If you've been paying under the market, then be grateful, and work out a fair deal with your current owner, or move.

Nov 24, 2012
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Debbie H.
Broker/Agent
Loma Linda, CA

3-5% annually is usually fair and reasonable

Dec 1, 2012
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Theodore B.
Broker/Agent
Houston, TX

NO, not unless there is a renewal clause in place.

Dec 4, 2012
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John P.
Broker/Agent
Glen Burnie, MD

All renewals generally begin at "Market Rates" (whether admitted by the Landlord or not). At this point the tenant needs a representative who knows the current market and can move this new rent number toward the tenant's benefit. The tenant representative will also look at the Tenant improvements done (or subsidized) by the Landlord for your benefit to see if these Landlord costs have been amortized through the prior lease term. If so, then the rent can likely be negotiated downward to reflect the Landlord having been fully compensated for those improvements.
Final note: Did the tenant notify the Landlord (within the time period specified in the lease) of his/her intention to stay in the premises: Helps the Tenant's Negotiation position if "Yes". Is the Tenant in a "Hold-over" situation: Hurts the Tenant's position if "Yes".
In all cases a competent Commercial Representative is your best alternative; we are usually compensated by the Landlord --through the Landlord's agent;. but work exclusively for you, the tenant, (but only through a Representation Agreement with the Tenant-Maryland).

Dec 5, 2012
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Michael C.
Broker/Agent
Chapel Hill, NC

There is no max for rental increases some landlords like to use the CPI or flat percentage increases some factors to consider are who pays utilities and maintenance when looking at increases

Dec 6, 2012
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Chris S.
Broker/Agent
Coeur D'alene, ID

No. There is no maximum, it's the landlord's property and they can do as they please and whatever the market will support. It's called "free market economy" ... not trying to be a smart ass, but it's the truth. Maybe your landlord just wants you out?

Feb 18, 2013
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