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Preparing for Your Lease Expiration

Managing your commercial lease is a big responsibility. It is not a document that can be signed and then filed until expiration. On the contrary, you commercial lease is a document with which you should be familiar and that should be referenced many times during your lease term. When your lease is coming up on expiration, it is important to start taking action as early as 1-2 years ahead of time.

 

First: review your lease, especially the provisions regarding lease expiration. Do you have an option to renew? If so, there are usually specified terms defining that option and how long you have the right to exercise your renewal. Look at the terms outlining the condition of the space upon exiting. Some leases require that the space be returned to its original condition. The lease will also usually outline the regulations for physically moving from the space.

 

Next: get a game plan. Are you going to stay or go? Of course, many factors will play into this decision, but it’s important to have an idea of what you want to do. If you want to stay, first, make sure that you have the right to stay. Then, thinking about what terms you may want to renegotiate with your landlord for lease renewal. If you want to leave, the first thing to do is to engage a broker. Commercial buildings are not widely searchable online so it’s best to talk to a broker to find out what your options are.

 

Next: meet with your landlord. The sooner you can meet with your landlord, the better. Building a relationship and working together towards your lease expiration and move or your lease renewal is ideal. If you want to stay but need more space, talk to your landlord about expansion or first right of refusal options. Work the landlord (and your broker) on potential terms of a new lease, or renegotiating the terms of expiration, if necessary.

 

Of course, your real estate project manager can help with these decisions too. Site selection due diligence and reviewing the terms of a lease are all part of a project manager’s job. It is always best to have as much information as possible when heading into a legally binding agreement for your business.

Katie Craven
Katie Craven is Marketing, Communication and Brand Manager at Watchdog Real Estate Project Managers, a real-estate consulting firm that provides owner’s representation and project management services. More about Watchdog Real Estate Project Managers as well as additional blog posts can be found here.
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