When Should You Start Looking for New Commercial Space? A Tenant’s Timeline
If your commercial lease expires next year, it may feel like you have plenty of time to decide what comes next. In reality, one of the biggest mistakes tenants make is waiting too long to evaluate their options.
Whether you occupy office, industrial, warehouse or flex space, starting the process early can give your company more choices, stronger negotiating leverage and enough time to make a well-informed real estate decision.
So, when should you start looking for new commercial space?
For many tenants, the answer is 9 to 18 months before your current lease expires.
Why Commercial Tenants Should Start Early
Finding commercial space involves much more than touring a few buildings and choosing a location.
Before signing a new lease, tenants may need to:
Evaluate current and future space requirements
Research available properties
Compare rental rates and operating expenses
Tour multiple buildings
Request and compare proposals
Negotiate business terms
Review lease documents
Plan construction or tenant improvements
Coordinate furniture, technology and moving logistics
Depending on the size and complexity of the requirement, this process can take months.
Starting early doesn't mean you have to move. It simply gives you the ability to evaluate the market before making a decision.
12–18 Months Before Lease Expiration: Understand Your Options
For larger or more complicated requirements, the commercial real estate process can begin as early as 12 to 18 months before lease expiration.
This is a good time to evaluate your existing space.
Is your company growing? Are employees using the office differently than they were when you originally signed your lease? Do you need more warehouse space, additional parking, better visibility or easier access for customers and employees?
Your commercial real estate advisor can also begin researching the market to understand current availability, asking rents and potential alternatives.
Even if you ultimately decide to renew your existing lease, understanding your other options can be valuable when negotiating with your current landlord.
9–12 Months Before Lease Expiration: Start Touring Commercial Properties
By this point, most tenants should have a clear understanding of their space requirements and begin evaluating specific properties.
This may include comparing factors such as:
Location and access: How convenient is the property for employees, customers, vendors and deliveries?
Rental rate: What is the quoted base rent, and how does it compare with competing properties?
Operating expenses: What additional expenses will the tenant be responsible for beyond base rent?
Parking: Is adequate parking available, and is there an additional charge?
Tenant improvement allowance: Will the landlord contribute toward improvements to the space?
Lease term: How long of a commitment is required?
Expansion or contraction options: Does the lease provide flexibility as your business changes?
Looking beyond the advertised rental rate is important. Two spaces with similar asking rents can have very different total occupancy costs.
6–9 Months Before Lease Expiration: Negotiate Your Best Options
Once you've narrowed the search, your tenant representative can request proposals from landlords and compare the economics of each option.
This is where competition can become valuable.
Rather than negotiating with only one landlord, tenants may be able to compare several alternatives and negotiate items such as:
Base rental rate
Free rent
Tenant improvement allowances
Operating expense structures
Parking costs
Renewal options
Expansion rights
Signage
Lease commencement dates
The strongest negotiating position often comes from having legitimate alternatives.
If your existing landlord knows you have no time to relocate, your leverage may be limited. Starting early gives you the ability to negotiate from a position of choice rather than necessity.
3–6 Months Before Lease Expiration: Lease Review and Build-Out
After business terms are agreed upon, there is still work to do.
Attorneys may need to negotiate lease language, architects may need to prepare plans, contractors may need to price improvements and permits may need to be obtained.
For spaces requiring significant construction, the timeline can be even longer.
This is another reason waiting until the final few months of a lease can create unnecessary pressure.
Should You Consider Renewing Your Existing Commercial Lease?
Absolutely.
A successful tenant representation assignment doesn't necessarily end with a relocation.
Sometimes the best real estate decision is staying exactly where you are.
The important part is determining whether your renewal terms are competitive with the market.
Before accepting a landlord's renewal proposal, tenants should understand comparable rental rates, available alternatives, concessions being offered at competing properties and the overall economics of staying versus relocating.
That market knowledge can help create leverage during renewal negotiations.
Why Use a Tenant Representation Broker?
A tenant representation broker works on behalf of the tenant rather than the landlord.
A tenant advisor can help identify available properties, evaluate financial terms, coordinate tours, request proposals, compare occupancy costs and negotiate with landlords throughout the process.
Perhaps most importantly, tenant representation gives businesses access to market information they may not encounter by simply searching commercial real estate listings online.
Commercial leases can represent a significant long-term financial commitment. Having an advisor focused specifically on the tenant's interests can help businesses make more informed real estate decisions.
Planning a Commercial Lease Renewal or Relocation in Atlanta?
If your commercial lease expires within the next 12 to 18 months, now may be the right time to start evaluating your options.
Wildmor Advisors provides commercial tenant representation in Atlanta and throughout the surrounding market, helping businesses evaluate lease renewals, relocations and new commercial space requirements.
Whether you're searching for office, industrial, warehouse or flex space, our team can help you understand the market, compare your options and negotiate a lease that supports your business.
Thinking about renewing or relocating? Contact Wildmor Advisors to start evaluating your options before your lease deadline starts dictating your decisions.