Whether to renew your commercial lease or relocate depends on the total cost of each option over the next term, how well your current space fits your business, and how much leverage you have with your landlord. The key is to start early, usually 12 to 18 months before your lease expires (earlier for large spaces), so you have time to test the market. Even if you stay, real alternatives are what get you better renewal terms.
Start with your lease deadlines
Find these dates in your lease first:
- Expiration date.
- Renewal option notice deadline. Many options must be exercised months before expiration, and if you miss it, the option may be lost.
- Holdover terms. Staying past expiration without a new agreement often costs a much higher rent.
- Restoration obligations. What you must remove or repair if you leave.
Renew vs. relocate: what to compare
| Factor | Renewing | Relocating |
|---|---|---|
| Rent and concessions | Landlord may offer less free rent or allowance than to a new tenant | New landlords may compete with free rent and allowances |
| Build-out | Little or none; a refresh may be negotiated | New build-out, partly offset by an allowance |
| Moving cost and downtime | None | Moving, IT, signage, new furniture and disruption |
| Fit | Same layout, size and location | Chance to right-size, upgrade or move closer to customers and staff |
| Restoration | Usually deferred | May have to restore the old space |
Put both options into one side-by-side model of total occupancy cost over the term. Read how a tenant representative can save your business money.
Signs you should consider moving
- You have outgrown the space, or you are paying for space you no longer use.
- The building no longer fits your image, clients or staff.
- Your customers or employees have shifted to another part of Northern Virginia.
- The landlord's renewal offer is well above what comparable spaces are leasing for.
- The building has maintenance or parking problems the landlord will not fix.
How to negotiate a renewal
- Know the market. Gather comparable lease rates and concessions in your submarket.
- Tour alternatives. A credible option to move is your strongest leverage.
- Ask for the same concessions a new tenant would get: free rent, a refurbishment allowance, lower escalations, and caps on expenses.
- Negotiate flexibility: a shorter term, expansion or contraction rights, or an early termination option.
- Put it in writing before your notice deadline passes.
Read how to negotiate a better commercial lease and how to negotiate a lower rental rate.
Plan the timeline
Finding, negotiating and building out new space takes time. Read how long it takes to find and lease commercial space. Starting late is the most common reason tenants accept a weak renewal.
How Fred's Properties helps
As your tenant representative, we analyze your renewal offer, survey alternatives across Northern Virginia, model the cost of staying and moving, and negotiate with your landlord or a new one. Browse properties for lease.
Next step
Lease expiring in the next 18 months? Call Fred at 703-505-3501 or send us a message with your expiration date, size and location.
Frequently asked questions
When should I start negotiating my lease renewal?
Often 12 to 18 months before expiration, and earlier for large spaces or significant build-out. Check your renewal notice deadline.
Can I negotiate a lower rent on renewal?
Yes, if market rents support it. A renewal option may set the rent by formula, but many are open to negotiation, especially if you have alternatives.
What happens if I miss my renewal option deadline?
The option may be lost, and the landlord is no longer bound by its terms. You can still negotiate, but with less leverage.
Is it cheaper to stay or move?
It depends on the rent, concessions, build-out and moving costs. Compare total occupancy cost for both over the same term.
Does a tenant rep help with renewals?
Yes. Renewals are a core part of tenant representation, and the landlord often pays the commission.
