Advantages & Disadvantages of Renewing Your Lease

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If the lease on one or more of your locations is coming up for renewal soon and you want to retain the location, you'll have to decide whether you want to stay or go. Staying in your current location can be affordable and convenient, but staying in the same place has some meaningful drawbacks as well. However, if you want to stay, there are ways to minimize those drawbacks.

Advantages of Renewing Your Lease

Staying in the same location minimizes the interruption to your business. 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.
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.
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.
You don't have to spend any time looking for a new space, going on tours or engaging in negotiations. Renewing your lease is usually fast and simple, especially if you have renewal options that put the process on auto-pilot.

Disadvantages of Renewing Your Lease

If your current location has been surpassed by new developments, you won't be able to take advantage of the best buildings in the market.
You will miss out on the opportunity to build a new space that better suits your needs as you see them moving forward. Staying where you are also means that you'll have a space that does not conform to the latest trends in commercial space build-outs.
The simplicity of renewing the lease stops many tenants from doing a market survey to ensure that they are getting a good deal.
Staying in place robs you of the opportunity to create excitement among your workforce for a new space.

The Best of Both Worlds

If you decide that the advantages of retaining your space outweigh the drawbacks, you can make your renewal an even more profitable process by engaging in some strategy. Here are some tips and rules to keep in mind:

Conduct 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.
Don't automatically take your renewal option. If rent levels in your market have moved down, your option may lead to higher rent than your landlord would charge a new tenant.
Negotiate for landlord concessions. If you move out of your space, your landlord will probably have to pay leasing commissions, provide a tenant improvement allowance and offer other concessions like free rent to lure in a tenant. He will probably also have a vacancy for a while as he sources a tenant. You should be able to get at least some of those benefits from him for a renewal.
Reconfigure your space. Just because you're staying in the same place doesn't mean you can't shake things up a bit. If you need less space, your renewal is an excellent time to contract just as it's an excellent time to grow.