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Another one of the biggest mistakes I see commercial tenants make is waiting too long to think about their lease renewal.
If you are only starting the conversation a few weeks before the lease expires, you may already have given up a lot of your leverage because the landlord knows relocating the business may no longer be realistic.
I always recommend starting with the lease itself. Look at the expiration date, whether you have a renewal option, and exactly when that option has to be exercised. Some leases require notice many months before the expiration date, and if you miss that deadline, you may lose a right that was already negotiated into your lease.
From there, you need enough time to understand what is happening in the market. For many businesses, beginning the process around a year before expiration is a reasonable place to start.
Larger spaces, complicated buildouts, or businesses that would be difficult to relocate may need significantly more time. Depending on the situation, some companies begin evaluating their options 18 to 24 months before the lease ends.
Starting early does not mean you have decided to move. It means you are giving yourself enough time to understand your alternatives.
You can look at comparable spaces, see what rents are being quoted, understand what landlords are offering in the current market, estimate the cost of relocating, and decide whether your existing space still works for the business. All of that information becomes useful when you receive a renewal proposal from your current landlord.
A renewal is also the time to look beyond the rent.
Your business may be very different from the company that originally signed the lease five or ten years ago. Maybe you need more space or less space. Maybe you need better signage, different assignment rights, improvements to the premises, additional renewal options, or changes to the guarantee.
There may also be lease provisions that did not seem important the first time around but matter much more now.
That is why I do not look at a renewal as simply extending the existing lease.
It deserves the same kind of review as a new transaction because you are making another long-term commitment based on where the business is today and where you expect it to go next.
The more time you give yourself, the more information you have, the more alternatives you can consider, and the stronger your position is when it is time to negotiate.
xoxo
Cyn
