Austin office Space Lease Renewals

Office space or any commercial property lease renewals are critical especially if you own a business and you are going to sell that business midstream into your lease period. The lease renewal will be critical to the potential buyer of your business. As a retail property user, you should have some caution around lease renewals that have to do with you making a percentage rent in the sales of your product or service. There are quite a few lease renewals that do not allow for any more tenant improvements or free rent concessions. In some leases, the lease renewal option may be allowed but may be rescinded further into your lease.

Lease language

Pay close attention to the lease language in your lease, if you have questions , you should consult a Commercial Real Estate Attorney for advice. If you have defaulted on your lease or have had late payment history, a lot of times the lease renewal provision will be nullified.  Lease renewal options can be and should be negotiated before you sign your initial lease document.  Lease renewal periods are usually equal to the original term of your lease however, these can be re-negotiated with the help of a knowledgeable commercial real estate broker. In the lease renewal language , the words “up to” can be included. As an example the verbiage may go as follows, the lease renewal period will be for a term up to 5 years.  This gives a tenant an option to renew at a different term than what was originally negotiated.

When you have the words “up to” in your lease renewal period, you may want to exercise to stay a few months while your next space is having tenant improvements done to it. Be aware that most landlords are not going to allow you to stay an extra 2 months without some type of Holdover period.  Holdovers have additional charges on top of your original rent , so be aware of what the percentage is in addition to your original lease rate.