St. Louis, MO 63122 | (314) 821-0085 |  doug@howardcommercial.net 

Searching for commercial office space to rent is a vastly time consuming and costly job. Once you find the perfect space for your company, what if you decide you don’t want or need to move at the end of your lease? That’s why it’s imperative to negotiate a fair lease extension clause in your commercial lease. The following tips will help you do that.

Analyze your needs

The language in the lease extension clause allows you to renew your lease when it expires if you don’t want to move. When you go to negotiate have an idea of how long you see yourself needing your space. Very often the extension clause will have various time periods listed. For example if your initial lease is for 3 years and you have the option to renew 2 more times you know you’ll have your office space for at least 9 years. This is ideal if you’re working on a project in your area that stretches on longer than you had anticipated.

Negotiate for your original rent

Landlords will attempt to set terms in a an extension clause to raise the rent based on the fair market value of the space. Obviously this allows them to make more money on the space in the future if property values increase but it’s a problem for your company. You don’t want to suddenly be faced with a huge rent increase if you choose to stay.

Know what actions to take

Your extension clause will contain language that will tell you what steps you need to take to exercise your right to renew with specific dates and deadlines. Your contract may state that you need to notify your landlord if you wish to renew or only if you don’t.

Enlist the help of an expert

This is the most important tip: Don’t do this yourself. Extension clauses are solely beneficial for tenants. Landlords may try to use weak language or word the clause in a way that makes it hard to interpret and therefore easy to break. Even if your company is somewhat familiar with the market and rental negotiations, you will best be served by engaging an experienced commercial real estate advisory firm whose job it is to represent your best interests and help negotiate the best deal the market will bear.

Give us a call at 314.821.0085 or send us an introductory email at doug@howardcommercial.net

 

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