4 Things You Need To Know About An Office Lease Renewal Option To Protect Your Company
November 17, 2015 | Posted In Insider's View, News & Resources, Newsletters
By: Carrie S. Holstead
President & CEO, Carrie S. Holstead Real Estate Consultants, Inc. / ITRA Global
Don’t be lulled into thinking your company is protected simply because there is a renewal option in your office lease. Instead, know the four reasons your company is not protected and the solution.
1. Renewal Rental Rate – Given long term market trends, this rental rate is typically subject to negotiation because it is only defined as the fair market value, if at all.
2. Other Key Terms – At least one of the other key renewal terms is normally subject to negotiation because it is not defined. Often falling into this category is the base year for operating and tax expenses, tenant improvements, and other lease inducements.
3. Square Feet – Most renewal options require the entire space initially leased to be renewed and any reduction will negate this option.
4. Renewal Notification – Landlords typically require the tenant to provide nine to twelve months advance written notice in order to exercise a renewal option. If this date passes and notification is not provided, there is no assurance your company will be able to stay in its space following the lease expiration. This is particularly relevant if the landlord can package your space to accommodate a larger user that has expressed interest.
The solution is to conduct a lease analysis process that substantiates your negotiating position and secures your most attractive lease arrangement. To protect our clients, we typically start this lease analysis process twelve months in advance of the renewal notification date in order to have ample opportunity to prepare an office space program, survey availabilities, tour buildings, leverage the market so that landlord’s compete for our client’s occupancy, and negotiate the most attractive lease arrangement as well as protective lease language, in our client’s best interest.
About the Author
Carrie S. Holstead is the Founder, President and CEO of the longest established tenant representation firm in Pittsburgh, Pennsylvania, as well as Chairman Emeritus of ITRA Global with experience in nearly 300 markets around the world. She has been honored as a Woman of Influence by Real Estate Forum Magazine (2015), and is the acclaimed author of the monthly Insider’s View To Corporate Real Estate. If your company needs to expand, contract, merge, relocate, or renew an office leases(s), locally or globally, contact Carrie Holstead at
+1 (412) 255-3737. To receive the Insider’s View To Corporate Real Estate electronically, sign up at www.carrieholstead.com.
All information provided herein is from sourced deemed reliable but no warranty, expressed or implied, is made.
