Renew, Renegotiate or Relocate?
What Office Tenants Should Review Before Their Lease Expires
A lease renewal should not be treated as an automatic decision.
It is an opportunity to determine whether your current space, building, lease terms and occupancy costs still support your business. Even if you would prefer to remain, understanding the available alternatives can help you make a better decision and negotiate from a more informed position.
Your Real Estate Should Support Your Business
A commercial lease can affect more than your monthly rent. It can influence employee productivity, customer access, operating expenses, recruiting, future growth and the overall value of your business.
Before renewing, consider what has changed since you signed your current lease:
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Has your workforce grown or become more flexible?
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Are you using all the space you currently occupy?
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Do employees and customers have adequate parking?
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Does the building project the image you want for your business?
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Are operating expenses increasing faster than expected?
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Will the space accommodate your plans for the next several years?
The right decision may be to renew, renegotiate or relocate. The important thing is to evaluate all three possibilities before your options become limited.
Renew
Renewing may be the right decision when the location works, the space continues to meet your needs and the proposed lease terms are competitive
However, renewal does not mean simply accepting the landlord’s first proposal. Your existing tenancy, payment history and the cost of replacing you may provide negotiating leverage.
Renegotiate
Relocate
Your present space may still work, but certain lease terms may no longer fit your business.
Relocation may be appropriate when the space is too large, too small, too expensive or no longer supports your employees and customers.
You may want to discuss the rental rate, operating expenses, renewal term, improvement allowance, parking, expansion rights or other provisions before making a new commitment.
Reviewing nearby alternatives can also reveal better amenities, improved visibility, more convenient access or a space that requires fewer modifications.
Look Beyond the Asking Rent
Base rent is only one part of the financial decision. A meaningful comparison should consider the total cost and operational value of each alternative.
Space Requirements
Review your current square footage, layout, meeting rooms, private offices, storage and future growth requirements.
Total Occupancy Costs
Consider base rent, operating expenses, taxes, insurance, utilities, parking, after-hours HVAC and other building charges.
Lease Terms
Review renewal options, notice deadlines, annual increases, maintenance responsibilities, assignment rights and expansion or contraction provisions.
Building and Location
Evaluate parking, accessibility, security, property management, signage, technology, nearby services and convenience for employees and customers.
Available Alternatives
Compare vacancies, asking rents, concessions, improvement allowances and lease terms at competing properties.
You Do Not Have to Move to Benefit From Knowing the Market
Many business owners wait for a renewal proposal before investigating other options. By that time, important notice dates may have passed and there may not be enough time to seriously consider relocating.
Reviewing competing properties does not obligate you to move. It provides information that can help answer several important questions:
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Is the proposed renewal rate competitive?
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Are other buildings offering meaningful concessions?
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Could another location improve the business?
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What would it cost to relocate?
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What is the financial value of remaining in place?
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Which alternative best supports your long-term goals?
Market knowledge allows you to evaluate the landlord’s proposal in context rather than making the decision in isolation.
How I Help Office Tenants Evaluate Their Options
1. Understand Your Business
We begin with your objectives, current space, employees, customers, operating needs and future plans.
2. Review the Current Lease
We identify important dates, financial obligations and lease provisions that may affect your available options.
3. Complete a Market Check
We compare your current situation with appropriate vacancies, asking rents, concessions and building amenities.
4. Develop a Strategy
Based on the findings, we develop a plan to renew, renegotiate or relocate—and help you negotiate from a better-informed position.
A Real Estate Decision Should Solve a Business Problem
A dental practice was operating from a second-floor location that required patients to use stairs. This created an accessibility concern and affected the practice’s ability to serve some patients comfortably.
After reviewing the practice’s operational needs, I located an off-market, single-story space approximately one mile away.
The resulting lease included:
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An 11-year initial term
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Two additional five-year options
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Twelve months of free base rent
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Limits on future common-area-maintenance increases
The solution was not simply finding available space. It was identifying a location and negotiating lease terms that better supported the practice, its patients and its long-term plans.
Begin Before Your Options Become Limited
If your office lease is approaching a renewal, now may be a good time to evaluate your options.
I would be pleased to provide a complimentary Lease Review and Market Check. We can discuss your current space, future requirements and how nearby office opportunities may affect your decision.
A brief conversation may help you decide whether renewing, renegotiating or relocating makes the most sense for your business.