What to do if your warehouse, office, or retail property lease expires soon?

Options to renew, extend, renegotiate, or holdover your lease deal, can help protect your business.?

Usually, a commercial lease contract will define a date of “lease termination”. It should also outline rights (to renewal, extension, subletting and more) and obligations (often referred to as “make good” obligations) come lease expiry time.??

In this edition of How To Lease Good ( #HowTLG) , we discuss what you can do as a business when your commercial lease agreement is coming to an end.

Renewing, extending and relocating may all be good options. Identifying the pros and cons of each, initiating strategic communications with your landlord, and evaluating possible courses of action are critical.?Generally, when leasing warehouses, offices or retail sites as a commercial tenant, everything is negotiable – provided you and your business:??

Plan and start early (12+ months before expiry)??

Enquire about strategic help (especially for understanding your lease terms and clauses, and for negotiations with the landlord)??

Remain compliant.

Consider your options?

First, have a look at what space you need – now and for the foreseeable future - and consider what sites are available. Check commercialrealestate.com.au and realcommercial.com.au , but don’t stop here. Off-market properties, which aren’t listed on these sites, may be a better fit for your business, or offer a better deal. Speak to a tenant representative, or any property advisor who works on behalf of commercial tenants (rather than landlords) about how to access off-market lease deals .

A lot can change in the time since you signed your last lease.?

Understanding the range of properties that are currently available, as well as the terms of your current lease, is crucial to making the decision of whether to stay at your current site or relocate.?

Specialist lease negotiators and property sourcing experts can help you weigh up these options. Tenant Leasing Group (TLG) is just one such advisory – but whoever you reach out to, speak to someone!?

?

Staying in the space?

If you want to stay where you are, there are a few different ways to go about it.

Renewing your lease?

This involves extending the existing agreement for a specified period, typically with the same terms and conditions. It provides stability for the tenant and allows for seamless continuation of operations without the hassle of relocating. As a commercial tenant advisory business specializing in negotiations with landlords, we can help get you a deal with favorable renewal terms that align with your business objectives.?

Extending your lease?

For businesses not ready to commit to a long-term renewal, lease extension can be a flexible alternative. An extension grants a temporary prolongation of the existing lease, giving a business time to seek out other options or reassess their space needs. In these situations, the ‘holdover clause’ can be a crucial provision: it allows the tenant to remain in the space on a month-to-month basis after the lease expiration, albeit with certain adjustments to terms and possibly at a higher rent.?Identify what holdover provisions exist under your current lease - speak to an advisor.

Renegotiating your lease, or negotiating a new one?

Changing market conditions, business growth, or shifts in strategy may necessitate a reassessment of your current lease terms – even before the lease expiry date. Renegotiating your lease provides an opportunity to make sure the deal you're getting works for you and your evolving business needs. Whether by adjusting rental rates, modifying space configurations, or renegotiating the lease duration, there may be scope to improve upon existing terms.?

?

Moving out of the space?

Finding the new location and ensuring that obligations under the expiring lease agreement have been fulfilled, are crucial to a smooth end-of-lease experience and no nasty legal surprises.

Relocating?

Moving to a new space may align better with your business growth plans or changing operational needs. Relocating offers an opportunity to explore sites that may be more central or well-connected, larger spaces, or facilities with different features.

Tenant Leasing Group (TLG) specialize in identifying and securing new premises that fit your business brief. From evaluating potential locations to negotiating the deal, we are entirely focussed on securing the best outcome for the tenant, and minimisimg any disruptions to business operations.?

Proximity to target markets, accessibility, cost, lease term and other factors should be considered. Whether expanding, downsizing, or seeking a more cost-effective solution, we work closely with clients to conduct thorough market analyses, assess and shortlist potential properties, organise inspections, and ultimately negotiate a strong lease deal. Relocation should not only meet your immediate requirements, but also position your business for long-term success.?

Make Good Obligations?

When a commercial lease expires, tenants may be obligated to return the premises to its original condition. Such "make good" obligations may involve restoring alterations made to the property, removing fixtures, and ensuring the space is in a state comparable to its initial condition - as stipulated in the lease agreement. Plan and budget for these activities to protect yourself against unwanted fiscal penalties, and ensure the return of the security bond.?

Tenant Leasing Group (TLG) help tenants with their make good obligations by first and crucially, negotiating initial lease terms that are fair and reasonable, and then by helping businesses understand the scope of their required actions, managing landlord sign-off, and fulfilling any obligations in a cost-efficient manner.??

Security Bond / Bank Guarantee?

Many commercial leases require tenants to provide a Security Bond or a Bank Guarantee, which serves as a financial guarantee for the landlord against any potential breaches of contract. When moving out, the condition of the property is closely scrutinized, and return of the bond/bank guarantee is often linked to the landlord’s satisfaction that make-good obligations have been completed. Our expertise allows us to ensure a fair assessment of the property's condition and facilitate return of the security bond in a timely manner.?

?

To conclude, the expiration of a commercial lease requires careful consideration and strategic planning. By proactively addressing these key steps, you can make informed decisions that best serve the interests of your business.

Do you have a lease that's due to expire in 6, 12, 18 months? tl-group.com.au/contact

[email protected]

(+61) 418 961 045

Tenant Leasing Group (TLG) is a commercial property advisory specialised in sourcing and lease negotiation for warehouse, office, and multi-site retail.?

Impeccable service with an entrepreneurial spirit. Trusted for 50+ years' across Australia & New Zealand.

We do property so you can do business growth.

#HowToLeaseGood #leaseexpiry