Whether you are contemplating relocating or still considering renewing at your existing location you need to review your commercial real estate lease at least 12 months prior to lease expiration. You should focus on the following four lease provisions:
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- Check for Restoration Provisions. Your existing lease will spell out the obligations that relate to the maintenance and/or demolition of your current space. If the landlord is hoping to reuse parts of your existing space, the lease will contain language designed to minimize the damage caused during your move. If the landlord is intending to demo the space, the lease might contain language requiring the tenant to pay for the removal of certain items.
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- Check for Holdover Provisions. Holdover provisions require the tenant to pay damages to the landlord if the tenant remains in place after the lease term expires. These damages generally range from one and one half to double the rent being paid at expiration of the term.
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Review Your Extension Options. Your lease may contain an option to extend. If so the terms of the extension are often at “fair market value”. Having an extension option is important because it can prevent the landlord from leasing your space out from under you if you wish to remain in the space. You should review your lease well in advance of expiration because options to extend usually require the tenant to give a significant amount of advance notice to the landlord prior to lease expiration.
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- Review Your Landlord’s Right to Show Your Space. Your lease may specify that as the expiration approaches, the landlord has the right to show the space to new prospects. This process typically starts six to twelve months prior to expiration. Look for provisions that require the landlord to give you notice prior to the time the space will be shown in order to minimize disruption to your business.
At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases. We also assist businesses who are looking to purchase office, medical office, industrial, and retail space. Reach out to us for assistance at 813-300-2227 or via email at pam@mobiliticre.com Here at Mobiliti CRE we assist both small and large investors as well as owner-occupiers with commercial real estate purchases.