Can I negotiate new terms during a lease renewal?

Yes. Most commercial lease terms—including rent, CAM fees, and tenant improvements—can be renegotiated during renewal.

Should I hire a commercial broker or attorney?

Yes. Professional support ensures you avoid legal traps and negotiate favorable terms.

How is renewal rent determined?

Renewal rent is typically based on market rates, comparable properties, and building operating expenses.

Can I request tenant improvements during renewal?

Yes. Many tenants successfully negotiate TI allowances during renewal, especially long-term occupants.

What is the most common lease renewal mistake?

Waiting until the last minute, which weakens your negotiating leverage.

Key Legal Tips for Commercial Lease Renewals

Q: When should I start reviewing my commercial lease for renewal?

Start reviewing your commercial lease 12–18 months before expiration to allow ample time for negotiation.

Q: What if my lease auto-renews?

Auto-renewal clauses may still be challenged depending on notice requirements. Review your lease carefully.

gloryanng8
Dec 4, 2025
3 min read

Renewing a commercial lease can significantly impact your business’s future—positively or negatively. Whether you're a small business, corporate tenant, or growing startup, understanding the legal aspects of a lease renewal is essential to protecting your operations, financial stability, and long-term growth.

This guide outlines the most important legal considerations to review before renewing your commercial lease, along with expert insights to help you avoid common pitfalls.

Why Commercial Lease Renewals Require Careful Legal Review

Many business owners treat lease renewals as a simple extension of their current contract. However, renewal terms often involve:

Rent escalations
Operating expense changes
New clauses
Landlord-imposed restrictions
Liability shifts
Maintenance obligations

A poorly reviewed renewal can cost you thousands—or create long-term risks. Commercial leasing is complex, which is why legal due diligence is essential.

Learn more about why good planning matters:

👉 Essential Guide to Commercial Real Estate

Review Your Current Lease Thoroughly Before Negotiating

Before discussing renewal terms, analyze your original lease, including:

Rent Increase Structure

Check for:

Fixed increases
Percentage-based adjustments
CPI-based escalations

NNN or Operating Expense Obligations

Determine whether you’re responsible for:

Property taxes
Insurance
CAM fees

Auto-Renewal Clauses

Some leases renew automatically—often at higher rates.

Understanding these components helps you renegotiate from a position of strength.

Understand Your Legal Rights as a Tenant

In many states, tenants have renewal rights that can include:

Right of first refusal
Right of first offer
Rent cap protections
Notice periods
Good faith negotiation clauses

California-specific commercial real estate laws continue to evolve:

👉 What Is Assembly Bill 1033? https://www.dngcommercial.com/post/what-is-assembly-bill-1033

commercial lease agreements and new terms

Evaluate the Market Before Agreeing to New Terms

Never renew a lease without understanding current market conditions. Compare:

Rental rates in your submarket
Vacancy trends
Current concessions (free rent, TI allowances)
Competing property amenities

You might be able to negotiate a lower rate or improved terms based on market shifts.

Clarify Your Renewal Options (and Avoid Hidden Traps)

Renewal options are one of the most misunderstood parts of commercial leases. Common pitfalls include:

“Fair Market Value” Clauses

These allow the landlord to set renewal rates—but do you have the right to dispute or negotiate?

Penalty Rent

Some leases increase rent dramatically if renewal notice is late.

Unilateral Landlord Rights

Clauses may allow the landlord to relocate you within the property.

Learn more about avoiding overlooked risks:

👉 Overlooked Risks That Can Derail Your Commercial Investment

Negotiate Key Terms That Impact Your Business Long-Term

When renewing a lease, focus on terms that affect:

✔ Rent & Escalations

Negotiate caps or fixed increases.

✔ CAM Reconciliation

Request transparency and audit rights.

✔ Tenant Improvement Allowances (TI)

Often negotiable, even in renewals.

✔ Sublease/Assignment Rights

Vital if your business changes size or direction.

✔ Option to Expand or Contract

Flexibility is essential in today’s market.

Learn why strategic planning matters:

👉 The Importance of Strategic Commercial Real Estate Solutions

Document Every Negotiated Change in Writing

Oral agreements mean nothing in commercial real estate. Ensure:

All negotiated concessions
Rent changes
Maintenance responsibilities
Insurance requirements

…are included in the amended lease. Never rely on verbal promises.

FAQs

1. When should I start reviewing my commercial lease for renewal?

Ideally, 12–18 months before expiration.

2. Can I negotiate new terms during a renewal?

Yes—almost all terms can be renegotiated.

3. Should I hire a commercial real estate broker or attorney for renewals?

Yes. They protect your interests and identify hidden risks.

4. How do landlords determine renewal rent?

Often based on market rate, comps, and property expenses.

5. Can I request tenant improvements during a renewal?

Absolutely—many landlords prefer to keep existing tenants.

6. What if my lease auto-renews without my consent?

Review notice and termination clauses; legal support may be required.

7. What is the biggest mistake tenants make?

Waiting too long to start negotiating.