Apr 06, 2020

6 Advantages & Disadvantages of Renewing Your Office Lease

By Jason Brucella

6 Advantages & Disadvantages of Renewing Your Office Lease
At some point, you have to consider renewing your office lease or leasing a new office space. Deciding which option is the best for your business can be a bit challenging, especially if you like the current space, but you are concerned about missing out on new opportunities in the market. Here are a few advantages and disadvantages of renewing your office lease.

Advantages of Renewing Your Lease

  • Renewing your lease gives you great leverage to negotiate a reduction in your current rent rate to the current market rate, or even below. This is a great opportunity for you to cut down on your costs especially if you have been paying above the market rate.

  • Renewing your lease also allows you to lock in your location. Staying in the same location minimizes the interruption to your business. You won’t have to worry about communicating a new location for your customers. In addition, you have no moving expenses or downtime, no expense to reprint stationery and update company directories, and your customers will still be able to find you.

  • It saves you additional costs that you would have incurred if you rent new space. For instance, renewing your lease usually saves you from paying brokerage commissions or having the landlord's expense for the commissions they pay built into your new lease.

  • It saves you time. When you opt to renew your office lease, you won’t have to spend any valuable business time looking for a new space, going on tours or engaging in negotiations. Unlike getting a new office space, renewing your lease is usually fast and simple, especially if you have renewal options that put the process on auto-pilot.

  • Reusing your existing build-out can save you from having to make tenant improvements at a new space. Even with a T.I. contribution from the landlord, many tenants end up expending their own capital to configure their spaces.

 

Disadvantages of Renewing Your Lease

  • Before you renew your office lease, it is essential to check whether your current location has been surpassed by new developments. If this is the case, renewing your office rent means that you won't be able to take advantage of the best buildings in the market.

  • Renewing your office space may also mean missing out on the latest trends in commercial space build-outs.

  • Many commercial real estate customers are already missing out on various office perks that a new lease negotiation would have given them. The simplicity of renewing the lease stops many tenants from doing a market survey to ensure that they are getting a good deal.

  • Renewing your office lease may mean that there won’t be an opportunity for novelty in the office environment, at least for a year. This may lower creativity and excitement among the employees as they become familiar with the old environment.

  • You may miss out on new office locations that are better situated to cater to your increasing customers.

 

Deciding on Renewal

Most landlords want their good tenants to stay. Losing rent each month the office is vacant is a landlord’s nightmare, so it is important to landlords that tenants renew their office lease. You can use this to your advantage by conducting a market survey as if you planned to move. While this will take some time and effort, it will arm you with information that you can use as you negotiate with your landlord.

Here are a few other articles you might enjoy:

5 Ways to Make a Greener Office Space

8 Terms to Look for in Your Next Lease

Corporate Tenants & Repairs: Who's Responsible?

 

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Jason Brucella

Jason Brucella

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