Is now the time to see if you can renegotiate rent for your office or retail space—even if your lease isn’t up? The Wall Street Journal recently reported that many small business owners are seeking more favorable leases, and with rental rates showing signs of rising, you may want to act soon.

The Journal cites data from CoStar Group that average annual office leases had declined from $25.02 per square foot in the fourth quarter of 2008 to $23.20 a square foot during the same period in 2010. Vacancies rose in the same period from 11.8 percent to 13.4 percent

Retail and industrial rental rate averages also declined. Retail rates went from $17.51 per square foot at the end of 2008 to $15.56 in the fourth quarter of 2010, and vacancies rose to 7.3 percent from 6.6%. For industrial leases, the average was $5.47 per square foot in the fourth quarter of 2010, compared to $6.28 for the same period in 2008, while vacancies increased from 8.8 percent to 10.2%.

The Journal says rents are beginning to increase in big urban markets including New York City and Washington, DC. That means you may not want to wait much longer if you think you could do better than your current lease arrangements.

How can you increase your chances of a successful negotiation? Here are some tips the Journal experts suggest:

• Don’t try to negotiate too far ahead of your lease’s end date. Two years is about as far out as you can go, and the closer the end of the lease, the more leverage you’ll have.

• Put time on your side. While you don’t want to negotiate too early, you should leave yourself some time. Negotiating commercial leases can take months.

• Consider the vacancy rate in your office building, shopping center or industrial complex. If vacancies are already high or are increasing, you have more leverage. Landlords don’t want to see lots of empty spots.

• Are other tenants’ leases also up for renewal? If the landlord is risking several new vacancies close together, this could give you more bargaining power.

• Be ready for the landlord to call your bluff. If you are going to negotiate, you must be prepared to move out if necessary—so research your options before you begin negotiations. Being familiar with going rates in your area and having a backup plan will give you more leverage. And you don’t want to talk yourself out of your current lease, only to find you have nowhere better to go.

• Enlist the assistance of a commercial real estate broker. Not only can they help you with the ins and outs of negotiation, they can do the “dirty work” so there’s no bad blood between you and your landlord if you do end up staying in your location.

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Tags: Renegotiate Rent, Rent