By David Marino
For many business leaders, renewing a lease feels like the path of least resistance. The team is settled, the location is familiar and operations continue uninterrupted. Compared to relocating, renewing can seem simpler, faster and less disruptive. But in today’s historically soft commercial real estate markets, a new landlord will often fight harder to win your business than the current one will to retain it. Before even thinking about renewing your lease, here are the key conditions that a business owner, management team member or corporate real estate executive needs to consider:
1. Shift the Perspective—Don’t Talk About the Project as a “Lease Renewal”
Too often a tenant will talk about approaching the process as a lease renewal, or interviewing potential brokers/advisors and sharing with them that you want to engage someone to renew your lease. Not only have you anchored your own team with a bias toward renewal, but you have also telegraphed your intentions to the entire market, as the agents you did not hire have no duty to you, and you biased the mindset of whomever you engage that they don’t have to work that hard looking elsewhere, as you just want to stay and renew.
Done correctly, a lease renewal should simply be one choice that a company might make among other choices, which could involve buying a building or leasing elsewhere among a myriad of options. Ensuring that your own management team—and certainly the person you engage to represent you—has an open mind to fully negotiate your relocation options is critical. This ensures that you select the best-fitting option for your team operationally, locationally, culturally and environmentally, while also achieving the best economic and business terms possible.
2. Think Critically About the Current Space
So often tenants become complacent in their space, as if it’s like an old shoe: it might be comfortable and worn in, but it’s falling apart, poorly supportive, ill-fitting and won’t last another three to five years. A thoughtful renewal process starts a candid discussion about culture, operational requirements and talent strategy. Are you carrying excess space? Does your current location still support recruiting and employee engagement goals?
The year or two before the lease expires is the right time to be objective about your space. Since you last signed your lease, your organization and workplace policies have likely changed. Hybrid work may have altered daily occupancy patterns and future growth plans may look different than they did five or more years ago. The location may no longer fit your team to optimize their commutes; you might not have the right number of video conference rooms; the space could be optimized by reducing the number of offices, workstations or floors; the space could be dated cosmetically and not code-compliant; the building might not have competitive amenities, maintenance, reliability of building operating systems, property management…the list goes on. The space you commit to for the next term should reflect where your business is headed in the next three to seven years, rather than simply where it has been.
3. Go to Market at Renewal Time
Savvy business owners would not consider anything less than a fully vetted transaction for any other multi-year contract they sign, so why act passive at lease renewal? With proper preparation, many tenants can move over a three-day weekend and get their moving costs paid by the new landlord, yet many companies are renewing their leases in suboptimal space simply because they fear the cost and disruption of moving. Tenants who do not evaluate their alternatives generally pay a lease renewal premium of 15% to 25% compared to a new tenant coming into the building off the street.
Even if remaining in place feels likely, the broader market move options define your negotiating power and bracket your economics. Landlords negotiate renewal proposals based largely on what they believe your alternatives are, and not “comps” of other deals they have done, and how diligently you are pursuing those options, and who your agent/advisor is. Without a robust review of comparable buildings and real-time concession packages, renewal discussions lack context, information and leverage.
4. Start Early Enough to Preserve Negotiating Strength
Often landlords do not approach their tenants to renew and instead wait for the tenant to “play the first card”—the phone call from the tenant that is the tell that tips off the landlord that the tenant wants to renew. Often tenants begin renewal discussions four to six months before lease expiration, believing that window is sufficient, and without going to market as described above. But for any complex move that would require a permitted tenant improvement build-out elsewhere, even a year in advance of lease expiration is often not enough time to relocate, so tenants must take control of the game clock.
Starting the relocation/renewal process 12–24 months in advance allows leadership to evaluate alternatives thoroughly, conduct test fits, model financial scenarios and create competitive tension in the market. When timelines compress, urgency replaces strategy and leverage diminishes. When options remain open, negotiating strength increases.
5. Do Not Think of the Building Owner as Your Friend or Partner During the Renewal Process
Landlords are in the business of paying their mortgage and other expenses, giving a return to their partners or investors and making a profit—in that order. While there are surely exceptions, many building owners chummy up to their tenants, hoping that the tenant is complacent during renewal and doesn’t engage qualified representation that the landlord must pay. Many landlords do a good act of letting you think you’re getting the best of them, as it reinforces the narrative they have helped create. What business reason is there for landlords to have “relationships” with tenants, whereby a landlord is then vulnerable to leaving economics on the table, eroding the landlord’s profit? None, not a one.
6. Do Not Think the Landlord’s Broker Will Help You Negotiate with the Building Owner
Often the landlord’s broker will pitch you with “I know the landlord’s bottom line.” If that were true, is the landlord’s broker telling you that they are prepared to share the landlord’s confidential information with you and breach their fiduciary duty to your landlord? If their agency to the landlord is that fluid, you can only expect that the reverse will be true—your bottom line will be shared as well. You must understand that the landlord’s brokerage team is the outsourced sales and marketing arm for the building owner—the landlord’s proxy to do their bidding. That same brokerage team doesn’t just represent the landlord in dealing with you, as a conflicted “dual agent,” but also lists the rest of the building for lease, and likely other buildings that landlord owns for lease, and provides property management, capital markets and other advisory services to your landlord.
To create the appearance of independence, these multi-person listing teams will offer to split up and have one broker represent the landlord and another represent the tenant. But practically, they cannot negotiate against each other and should not be expected to. These brokers are long-time business partners and share in the commissions generated, so everything is just a wink and a nod. It’s a great deception to skirt around the inherent conflict of interest of the same broker representing two opposing parties, but it’s nothing less than a ruse.
What This Means for Business Leaders
A lease renewal may appear simpler than relocation, but it carries the same long-term financial and operational implications. The most effective leaders treat renewal not as an administrative exercise, but as a structured strategic review. By evaluating alignment, market position, economics, flexibility and timing, business leaders can ensure that their next lease term supports the business for years to come. Equally important is who leads and advises on that process. To level the playing field and create advantages, tenants benefit from representation that is exclusively aligned with their interests, with no competing obligations to property owners. A tenant advisor that does not work for a landlord listing brokerage firm brings market intelligence, optionality, negotiation leverage and a fiduciary mindset that ensures decisions are made with the company’s long-term strategy in mind, not the landlord’s.
