Your lease is up in a year and the space no longer fits: renew, move or buy wisely

The letter that shows up twelve months out

It usually starts with a notice from the landlord. Your lease expires next year, and the letter either proposes new terms or asks what you intend to do. Around the same time you have probably noticed that the space itself is the wrong size: the storage room has become an office, two people share a desk meant for one, or you are paying for a back half of the suite that nobody uses since half the team went remote. Rent is the second or third largest cost in most small companies, and this is the one moment every few years when it is open for negotiation.

I have worked in commercial real estate since 1999, when I started at The Staubach Company, and I have also owned a retail business and signed a lease as a tenant. From both sides I can tell you the same thing: the owner who treats this letter as a chore to deal with next quarter pays more than the owner who treats it as a project with a start date. The difference is not cleverness. It is time and information.

Why the renewal rarely favors the tenant by default

A landlord's renewal proposal is written by someone who negotiates leases for a living, and it is written to a tenant who does this once every three to five years. The proposal is anchored to the rent you already pay plus an increase, not to what comparable space in your submarket is leasing for today. It often leaves the lease language untouched, including clauses that may have cost you money without your noticing: how operating expenses are passed through, who pays for the roof and the HVAC, what happens if you need to sublease, and how the renewal option itself is priced.

Timing is the other reason. Once you are inside six months, the landlord knows that relocating a business takes longer than that, and your leverage falls with every week. A tenant who starts the conversation twelve to eighteen months out can credibly consider moving, and the landlord's proposal tends to improve when that is true. In Dallas–Fort Worth, where new office, retail and industrial space is constantly being built and older space is competing to stay full, the alternatives are real if you look for them early.

• The proposal anchors to your current rent, not the market
• Existing lease language carries forward unless you raise it
• Leverage falls sharply once the move-out window closes
• Concessions available to new tenants are rarely offered to renewing ones unless asked
• Nobody on the landlord's side is paid to point out what you missed

Questions to answer about your own business first

Before you look at a single listing, get clear on what the business needs for the next term. How many people will work here in three years, and how many days a week? Does the layout need to change: more conference rooms, fewer private offices, a showroom, a loading dock, more parking for customers? Is the location still right for the people you hire and the customers you serve, or has the center of gravity moved north, as it has for many companies in Collin County?

Then read your current lease, all of it. Find the expiration date, the notice deadline for exercising any renewal option, and how that option sets the rent. Find the operating expense clause and ask your bookkeeper what those pass-throughs have actually cost each year. Find out who is responsible for the HVAC units and whether any are near the end of their life. Finally, run the honest numbers: total occupancy cost per month today, including rent, expenses, utilities and the cost of the space you are not using.

• Headcount and work pattern three years out
• Layout, parking, loading and signage requirements
• Whether the location still serves staff and customers
• Expiration date, option notice deadline and how option rent is set
• What operating expense pass-throughs have really cost
• True monthly occupancy cost today, including unused space

Renew, relocate or buy: how I frame the three paths

Renewing is simplest and often right, especially if the space works and the market has not moved much. The question is whether you renew on the landlord's first proposal or on terms shaped by what else is available. Relocating costs money and disruption, but it resets everything: size, layout, location, lease language and often a tenant improvement allowance that pays for much of the build-out. For a growing company, the right move is sometimes the only way to get the space the business needs.

Buying is the path owners ask about most and pursue least, usually because nobody has walked them through it. For some businesses, owning the building through a separate entity and leasing it to the operating company builds an asset while the business pays rent anyway. For others, it ties up capital that the business needs to grow, or commits them to a location that will not fit in five years. Which path fits depends on the business, the owner's goals and the market, and it is a conversation to have with your accountant and attorney alongside your broker, not after the fact.

What tenant representation looks like, step by step

When I represent a tenant, I work only for the tenant. The first step is the needs analysis above, done together, so the search is for what the business needs rather than what happens to be listed. Then I survey the market: available space in the submarkets that make sense, including buildings not yet publicly marketed, with current asking rents and the concessions landlords are actually giving. That survey is what turns the landlord's renewal letter into one option among several.

Next come tours and a short list, then requests for proposals sent to several landlords at once, including your current one. Competing proposals are compared on total cost over the term, not on the headline rent, because free rent, improvement allowances, expense structures and escalation schedules change the real number. I negotiate the business terms into a letter of intent, and then the lease itself, flagging the clauses that matter for your business and working with your attorney on the legal review. After signing, I stay involved through the build-out and move so the space you negotiated is the space you get.

In most cases the tenant's broker is compensated by the landlord through a commission that is already built into the deal, which is why owners who go without representation are not saving that cost; they are leaving it on the table.

• Needs analysis and a budget for total occupancy cost
• Market survey of listed and unlisted space in the right submarkets
• Tours, short list and competing proposals, including from your current landlord
• Comparison on total cost over the term, not headline rent
• Letter of intent, lease negotiation and legal review with your attorney
• Oversight through build-out and move-in

What actually determines what you will pay

Rent is quoted per square foot per year in commercial property, and the quoted number is only the beginning. The lease structure decides what else you pay: in a triple-net lease the tenant covers taxes, insurance and common area maintenance on top of base rent; in a full-service or gross lease more of that is included. Two spaces with the same base rent can differ substantially in real cost once those are added, and the only fair comparison is the all-in monthly figure over the whole term.

Beyond structure, the drivers are location and building class, the length of the term, the size of the space, the condition of the space and how much the landlord will spend to improve it, the escalation schedule, and the market at the moment you sign. Longer terms usually bring better concessions but less flexibility. A landlord with a vacant floor in a competitive submarket behaves very differently from one whose building is full. Knowing which one you are talking to is most of the negotiation.

Choosing an advisor who sits on your side

Ask who the broker represents. A listing agent works for the landlord, and that is not a flaw, it is their job; it simply means they are not negotiating for you. Ask how long they have worked in commercial property specifically, since residential experience does not transfer well to lease economics. Ask which property types they know: office, retail and industrial each have their own norms, and a broker who handles all three will tell you honestly which one your business needs.

Then ask about process. Will they produce a written market survey? Will they run competing proposals and show you a side-by-side comparison of total cost? Will they work with your attorney on the lease rather than around them? A good advisor welcomes those questions. I would add one more: ask whether they have ever been a tenant. Signing a lease with your own name on the guarantee changes how you read one.

• Clear answer on who they represent in the transaction
• Experience in commercial property, in your property type
• Written market survey and side-by-side proposal comparison
• Willingness to work alongside your attorney and accountant
• References from business owners, not just landlords

Mistakes I have watched cost owners real money

Missing the renewal option notice date, which can turn a negotiated option into a month-to-month tenancy or a forced move. Signing the first proposal because moving sounded exhausting. Comparing spaces on base rent and discovering the expense pass-throughs after the first year. Signing a personal guarantee for the full term when a limited one was available for the asking. Accepting an as-is space and paying for improvements that a landlord with vacancy would have funded.

On the other side, I see owners who over-lease for growth that has not arrived yet, and pay for empty desks for three years. And I see owners who skip the attorney review to save a fee, then find a relocation clause or an assignment restriction that bites when they want to sell the business. In my experience, every one of these is avoidable with time, a market survey and someone whose only job is your side of the table.

What happens when you get in touch

The first conversation is a review of your situation: the business, the current lease, the timeline and what is driving the decision. I will tell you honestly whether you have time to run a full process or need to move quickly, and whether renewing, relocating or buying deserves the most attention. There is no cost for that conversation and no commitment.

If we proceed, we set a schedule working back from your expiration date and I start the market survey. From my office in McKinney I work across Dallas–Fort Worth on office, retail and industrial space, for tenants and for owners buying or selling. Whichever path you take, my aim is that you sign the next lease, or the closing documents, understanding every number in them and knowing what the alternatives were.

Questions people ask me