Top Tips for Negotiating Commercial Leases - #3 Never Exercise Your Renewal Option

Commercial Real Estate Agent with REATA Commercial Realty, Inc. Texas 537349

This may sound crazy, but exercising a renewal option is almost always a bad idea. The reason is that doing so may immediately obligate you to lease the space before you even know the rental rate. Exercising the option may trigger a series of events one of which is determining the rental rate, but you may be committed already. Not all renewal options work this way, but many do.

So what to do? The main thing is to start looking for options at least 3 months prior to the date by which your renewal option must be exercised (that's date is usually 6-12 months before expiration). Solicit a proposal from your current landlord as well as from other buildings in the area that have space that could accommodate your company. Once you have this information, you can then decide whether exercising your renewal option makes sense.

Just because you have a renewal option doesn't mean that you have to exercise it to renew your lease. You can always negotiate outside the option.

So why negotiate for a renewal option in the first place? It's simple. A renewal option is a reservation for the space. You don't want to give the landlord the opportunity to lease the space out from under you. I have seen that happen. If you do renew your lease, be sure to negotiate another renewal option to reserve the space again in the future.

I exclusively represent companies when they need to renew or relocate their office lease. While we work throughout Texas, our main market areas are Dallas and Collin Counties - Dallas, Plano, Addison, Richardson and Frisco.

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Bob Gibbons

REATA Commercial Realty, Inc. | 1211 E. 15th Street, Plano, TX  75074

972-468-1946 p | 866-439-8015 f | 972-984-8580 m |




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