My NYC Commercial Lease is Expiring: What Do I Do?

If your NYC commercial lease term is expiring soon, you are not alone. As The Real Deal reports here, upwards of 243 million square feet of office space leases are set to expire during the remainder of 2022 in NYC and elsewhere around the country. Further, it is estimated that leases for another 200 million square feet of space will expire in each of the following three years. What to do when your NYC commercial lease term is expiring depends on many factors, including what is written in your lease and whether you want to remain in the space. When your lease is expiring, this can open up business and profit opportunities, but can also cause concern and stress. The first step is to decide whether you want to remain in the space. If “yes,” then there are three options:

  • Exercise lease renewal options (if any)
  • Negotiate a new lease
  • Find new space

Let’s take a quick look at these options.

Lease renewal options

Many NYC commercial leases will have a base term — say, five years — and will often provide the tenant with the option to renew the lease on the terms and conditions specified. Often the renewal term is shorter — say, three years. Many leases will contain multiple renewal options. You must read the lease to determine if a renewal option is available. You should consult an experienced NYC commercial lease attorney for legal advice and counsel. Many leases will have strict notice requirements for when the tenant must exercise the option. If deadlines have been missed, it may still be possible to negotiate a renewal with the landlord. As reported here, office space occupancy rates are still less than half of the pre-pandemic levels as the trends toward remote working and smaller office spaces continue to accelerate.

Negotiate a new lease for the space.

Even if your current lease has no renewal option, you may be able to negotiate a new lease with the landlord. This will depend on whether the landlord wants to renew the lease and on what terms and conditions. This could be an opportunity to obtain lease concessions or a reduction in rent. But conversely, it could be the landlord’s opportunity to raise rates and impose additional lease burdens, and tenant obligations. Again, you would benefit from consulting with an experienced NYC commercial lease attorney for legal assistance.

Find new NYC commercial space and meet any current lease obligations

Finally, if no renewal option is available and/or no new lease can be negotiated, the only option is to find new space. Again, this might be stressful, but can also be seen as an opportunity for business growth and advancement. A significant rent reduction might be possible, or a more suitable space for your business — might now be available.

As you search for new space, do not forget the financial obligations with respect to your current location. For example, many leases require that the premises be surrendered in “broom clean” condition. Alternatively, there might be lease terms that must be met with respect to fixtures or tenant-made alterations.

Contact the NYC Commercial Lease Negotiators at Wright Law Firm NYC Today

Call the experienced New York commercial lease and real estate attorneys at Wright Law Firm NYC for more information. We provide commercial real estate legal services and legal services for the NYC business community. To schedule a consultation, contact our office by e-mail or call us at (212) 619-1500.