Negotiating a NNN Lease Renewal

[Chris T.]

I own a STNL retail property with a national tenant currently on an absolute NNN lease. At the next lease renewal, they have a 5 year option with a 10% increase (two renewal options left total). The lease states that they have to give 120 days notice prior to the renewal date, but I would like to begin the process well before then. My goal would to ideally get them on a new lease with a 10 year term. In seeing similar properties with the same tenant they seems to be signing 10 year initial term leases with 7.5% increases every 5 years. The value in a 10 year term (better refinance rates/sale value) would be worth it to me to drop their rental increases to 7.5%

My question is, is this something I could realistically handle myself (with a lawyer of course) or do large national tenants really want to deal with licensed brokers?    If it is something I can approach as the owner, how far out are companies looking when it comes to renewals?  If there is additional value using a broker, how best to find a leasing broker that has experience with a specific tenant?

[Joseph Cacciapaglia]

If you have a lawyer that routinely handles these types of lease negotiations, you should be fine without a broker, but one way or another, you need someone with insight into the current market for lease terms. I've had clients that negotiated early extension options with national NNN tenants on several occasions. You have to be offering them something of value though. It seems like the 2.5% lower increase would be compelling, but it will depend in part on how well the location is doing and what market lease rates are today. They may have been planning to negotiate a lower rate with you, instead of exercising their option.