It is up to the Tenant to notify the Landlord of his/her intention to exercise the “Option to Renew” during the lease specified notification window. Tenants need to be vigil about lease termination dates and option exercise timelines, not only to keep their renewal options in-tact, but to have better leverage when negotiating a renewal. Furthermore, if the Tenant does not notify the Landlord, the Landlord is not obligated to allow the Tenant to renew.
Avoid Costly Mistakes
One crucial mistake that a Tenant often makes, is to assume he/she can simply go to a month-to-month term until they find another location. Most leases will have a “Holdover” clause. These clauses in the lease agreement often allow the Landlord to charge a premium of sometimes as high as 200% of the last month’s rent.
How your Commercial Broker can help you
Keep in mind, it is always best to contact your commercial real estate professional at least a year prior to the expiration of your lease term to assist with these matters. Commercial real estate professionals can:
- Listen to your needs and provide specific options. Is it best to move or stay?
- Explain current market conditions and how they affect your potential move
- Provide a Lease vs. Buy analysis to see if it makes more sense to buy rather than lease
- Perform a comparable analysis to assist in re-negotiating with the current Landlord
- Find a new location and negotiate terms
- Provide a timeline for tenant improvements and assist in coordinating move