Even if you think you are going to grow, move or sell your business by the planned expiration of your lease, it is still in your best interests to secure a renewal right. First, you don’t know what the future holds and your current plans to double in size where you are may morph into plans to double in size by expanding to a new market. In that instance, you will want to keep your current location. And no matter how valuable your tenancy might be to your new landlord now, you cannot predict the future.
Example: you are a Fortune 500 company leasing one full floor for five years in a ten story building. In year three of your lease, a Fortune 100 company leases the two floors above you and the one beneath you. They negotiate a right to take your space at expiration of your lease. How can they do this? You don’t have a renewal right. Or, at expiration, they request your space. As much as your landlord wants to retain you, it is more important to him to retain the potentially four floor Fortune 100 tenant than you.
Now if you have a renewal right at a predetermined rate (either a specific dollar amount or a fair market rent determined by both parties), you still have the option to stay. You also have the option to work with the landlord to be relocated within the building at the landlord’s cost because the landlord cannot just opt not to renew your lease.
Disclaimer: I am and always have been a tenant representative. If you represent landlords, apply the opposite rule to the above rant.