If your lease is coming up for renewal, you might be planning to notify your landlord – but have you reviewed your lease recently? When preparing to renew a commercial lease, there are some key considerations beyond the rental rate for the new term.

Tenants might want to evaluate some key terms in the lease before sending an extension notice to their landlord:

1. Operating Expenses: If your lease is a triple-net or modified gross lease (meaning you pay some share of the operating expenses for the building or center), have you been properly charged by your landlord for expenses? Operating expenses, in addition to your base rent, can add up month after month. Landlords may be willing to reduce your annual escalation in operating expenses if you can prove that maintenance has been deferred or is not needed at your center or building.

2. Allowance for Buildout/Expansion: Is it time to upgrade your premises? Now is a good time to ask your landlord to contribute to new build-out or upgrades that your landlord will own at the end of your term. Do you need additional space or has an adjacent tenant vacated their space? Now is a good time to request to expand or relocate your premises to accommodate your evolving needs.

3. Options to Purchase or Right of First Refusal: Does your lease grant you the option to purchase the property during the Term or offer a right of first refusal if the Landlord decides to list the premises on the market? If not, is this an option that appeals to you now? It is worth asking your landlord their plans for the property to understand whether you may have a new landlord in the future.

4. Term Length: Does your lease have an explicit extension option(s)? If so, pay special attention to the protocol for exercising an option. If it is automatic, you might not need to do anything. However, each lease provision differs and you want to be certain not to waive an extension option or miss specific notice requirements.

5. Consider Alternatives: If your lease is silent with respect to any of these considerations, an expiring lease term may incentivize both landlord and tenant to discuss a lease amendment to add or modify existing terms.

Regardless of whether you lease office, industrial or retail space, understanding your rights as a tenant is critical to avoid a default or holdover position, which can mean additional rent costs, a potential default situation or both!