Does Your Lease Have a Termination Clause?

Clearly, the most important thing lessors can do to safeguard their postal investment is to read and understand their lease. We cannot emphasize it enough. Every day, AUSPL members call us with questions about their post office building. We always ask them what the lease says about the item in question.

For example, CBRE, which is negotiating new and renewal leases on behalf of the Postal Service, may still ask for a termination clause. The Postal Service has relaxed its termination clause requirement on buildings that are open eight hours per day. So, it’s important to know 1) if your lease has a termination clause and, 2) if your building is on the POStPlan, meaning its hours have been reduced to two, four or six  hours per day.  Termination clauses may still apply to buildings open two or four hours per day.

During a meeting between USPS Facilities headquarters and AUSPL management in Washington, D.C., the Postal Service agreed to accept five-year terms with no termination clause in exchange for lower annual market rents; however, this might not apply to all properties and some POStPlan facilities leases may include a termination clause. As always, everything is negotiable and lessors should negotiate for the longest termination, when applicable.

While USPS is willing to accept leases without a termination clause, if lessors “hold out for rents above what is reasonable, then USPS may be forced to close or move to another building nearby,” USPS officials said.  “The removal of the clause will help stabilize market values and should enable lessors to seek better financing, whether refinancing or purchasing.”

Simply put, know your building, its lease, always do your homework and call us at 800-572-9483 if we can assist you.