By Adam Frisch, Managing Principal, Mantus Real Estate
From a tenant’s point of view, there are a number of benefits to renewing one’s lease. Namely, these entail not having to deal with a move, enjoying the stability of staying in place and being able to truly make a space feel like home. This also means that owners shouldn’t be shy about raising rents when sending out lease renewals.
Owners will often increase the rent in cases where they feel that a unit is priced below market-rate or if the tenant received move-in concessions or other concessions unrelated to a maintenance issue. Typically, if a tenant received a significant concession upon moving in, their first increase will be sizable but subsequent ones will be much lower, if anything. If a building is undergoing major capital improvements, rent increases will usually be about three to four percent but can run as high as ten percent for those tenants who may have received generous concessions in the past.
In general, I almost always advise owners not to offer two-year leases. These are risky with a new tenant who may be a troublemaker and even if they are well behaved, there are too many variables that can change over two years – tenants may be relocated for their job or invite a problematic significant other to move in.
When considering what renewals to send out, it’s important for owners to ensure that everyone involved with a building, including brokers, superintendents and even doormen, is communicating with one another. To be a high-quality tenant, one must do more than simply pay their rent on time. Building staff members that are onsite day in and day out can help owners keep an eye out for new people that have moved into the apartment without adding their names to the lease or who are running an illegal Airbnb arrangement, gambling operation or drug dealing ring.
In general, it’s quite beneficial for both sides if owners are able to renew a high-quality tenant’s lease with terms that both parties can accept but in order to do so, one must consider what kind of tenant they’re dealing with and what that tenant has been given in the past.