Planning for your lease expiration takes timeOctober 26, 2017
Do you have an upcoming lease that is going to expire in the next 18 months? Planning for your next lease expiration takes time and the planning process can give you an edge. Some real estate decision makers are not aware of how much time is necessary to give to renewing your office lease or moving to another location.
- Pull your lease out and familiarize yourself with all the dates, make sure to look at the Amendments as well.
- Going through a renewal or relocation can take as long s 12 months. In order to maximize leverage, you need to allow the same time for both options.
- Why does it take so long? Look at your “Option to Renew” language and note your notice period.
- A timeline with details is attached.
If you have an upcoming lease expiration, you need to first start by pulling your current lease out and reviewing the master lease along with any amendments that were signed. Amendments can modify the original lease so it is wise to review those documents as well.
A big part of the renewal/relocation process is to be prepared. If you procrastinate, you convey to the landlord that you are not going to leave. If you don’t keep that option available, you eliminate your best alternative and the amount that you can negotiate is greatly limited. A relocation takes more time than just a renewal, to keep both options open, it is important that you start early so you can maximize your negotiating position. In addition, for renewals, you will likely be working within the Option to Renew timeline that is spelled out in your lease. Typical Option to Renew language requires the tenant to give notice 8-12 months prior to the lease expiration.
Timelines vary for every situation but I’ve attached a sample timeline showing the steps that typically go into a decision to relocate or renew. I’ve seen decisions made in 30 days but most timelines are more like 8-12 months.
As an intelligent tenant, it is recommended that you meet with a broker in advance of your lease expiration, at least 12-24 months prior to your lease expiration is recommended. In today’s climate you can expect to find fewer options available to you, rents that are higher than what you are currently paying and longer term requirements from landlords.
In order to avoid complete sticker shock, get out your lease and give me a call. We can go over your current business plan, make sure that you are in the best type of property for your business goals and review the real estate market together. Waiting until the last-minute adds pressure and gives landlords the upper hand so take a few minutes and let’s develop your real estate strategy together.