The most critical step is to understand all your options in your current lease. Leases can be complicated and overwhelming, so this would be an ideal time to engage a tenant rep broker and get their advice. They can easily break down your options and help you formulate a plan. Having a broker on your side will let the landlord know that you are serious about finding the best deal and that you have other options if they aren’t willing to negotiate a fair deal with you.
You will also need to start early, sometimes really early. Most leases require a 6-12 month notice if you intend to renew. Miss that window and you may be scrambling to find new office space. The landlord may have other plans for that space (and those plans might not include you), so if you do not give notice, you lose your renewal right. Have a tenant rep broker engage the landlord―they will get valuable insight on the landlord’s future plans.
Should you Stay?
- If you have a favorable renewal rate and the current space is still working well for you, then you will probably want to stay put. You might even want to consider renewing early.
- If you are pretty sure you want to stay but are not sure you will have a favorable renewal rate, you will want to have a broker do a market analysis. You may find a property thatsuits you better and has more favorable terms. Plus, your current landlord will know you are serious about getting the best deal.
- If you like your space, but it doesn’t meet your square footage needs anymore, talk to your landlord early. The landlord will most likely work with you to either expand/reduce your space, but it will take some time. Unfortunately, it won’t always be possible for them to accommodate you, so you will need ample time to find a new location.
- If the renewal notice date snuck up on you or you don’t have a renewal option and you are unsure of future needs, you may want to do a short-term lease. That will buy you some time to address your future needs and do a market evaluation.
- If you have an automatic renewal clause and you missed the notice date, you may be forced to stay in the space for the renewal term.
Should you move?
- If you do not have a renewal option or your current renewal option is not favorable, it may be in your best interest to look at other alternatives.
- Sometimes you may not have a choice. If you do not have a renewal right and the landlord wants your space to accommodate another tenant, they can make you leave at the end of your term.
- Evaluate your current space. Does it still meet your needs? Will it meet your future needs? If your current building can no longer accommodate your needs, you should consider moving.
- Outdated systems and amenities in your current building. Unless the landlord has a plan for upgrades, you will probably need to look elsewhere to meet those needs.
- If you have an unreasonable landlord.
- If you are not in your ideal location. You may have gotten a great lease rate, but at what cost? If you are off the beaten path with little or no access to public transportation or retail amenities, you may want to consider moving. Talk to your employees and clients and find out what is important to them.
Deciding whether to renew your lease or move doesn’t have to be a daunting task. Let a tenant rep broker do the heavy lifting for you. They can analyze your current lease, do a thorough market evaluation, and negotiate your new lease or lease renewal.