Commercial real estate leases are great. You get to set up your office, business, factory, etc. without having to buy the place and maintain relative flexibility. However, commercial real estate leases expire, and you need to have a legitimate one in place to ensure you are protected against eviction.

If your commercial real estate lease is about to expire, you are probably considering your current options. Here are a few things you can do in this scenario:

1. Do you have a Protected Lease?

For starters, you need to know which type of lease you currently have. There are two possibilities:

  1. Protected Leases
  2. Unprotected lease

A protected lease gives the tenant the right to remain in the property after the lease expires as a “holdover.” It also makes it mandatory for the property owner to renew the lease with minor changes if the tenant wants.

In contrast, an unprotected lease leaves the tenant vulnerable once the lease expires since the property owner can ask them to vacate right after and choose not to renew the lease.

2. Get your Lease Renewed or Terminated

Renewing your commercial real estate lease is often the best solution if the one you have is about to expire. However, if you have an unprotected lease, you should start the process months before the expiry.

You will need to notify your property owner about lease expiry and propose renewing it. Property owners often do not mind the arrangement, if your business relationship has been smooth. Owners prefer to work with people they know than ones they don’t.

If you want to move or the property owner refuses to let you pass. In this case, terminating the lease is the best solution.

3. Negotiate New Lease Terms

If you had an unprotected lease, you need to start negotiating new lease terms several months before the lease expires. This will give you both time to think over each other’s requirements and determine if you are happy with them.

4. Look for Other Options and Start Early

Finally, if you have been planning to shift your business, you need to start looking at new options in advance. You should notify your property owner so they also have the time to seek a new tenant.

Additionally, if you cannot reach an agreement with your property owner about renewing the commercial real estate lease, you need to again look for a new place to move to. This is also something you need to plan a few months or so in advance.

Conclusion

To sum up, your options after the lease expiry depend on the type of lease you are working with and your preferences. Based on these answers, you can choose whether you want to renew your lease to terminate it.

If you are looking to find new properties to move your business into, please contact us. CHRE has been working in commercial real estate for several years and we will enjoy helping you find a solution.