Renew or Relocate? Running the Numbers Honestly

The version of this question I get most often arrives about ninety days before a lease expires. The landlord has sent a renewal proposal, it is higher than the tenant expected, and the tenant wants to know whether it is fair.

By then the answer barely matters, because at ninety days the tenant cannot move. Permitting alone can eat that window. So the proposal is not really a proposal; it is a number the landlord knows you are going to accept. I have watched capable operators who negotiate hard on everything else in their business hand over six figures across a term because of a calendar.

So this is not a piece about whether to renew or relocate. It is a piece about what you have to do, and when, for that to be a real question at all.

The clock is most of the answer

Start twelve to eighteen months out. Not because touring takes a year, but because leverage is the credible possibility that you will leave, and credibility takes time to construct. You need to have seen the alternatives, gotten pricing on them, and know what your build-out would cost and how long it would take. A landlord can tell the difference between a tenant who has done that and a tenant who is bluffing, usually within one phone call.

There is a second reason, less obvious. Most leases contain a notice deadline for exercising a renewal option, often nine to twelve months before expiration. Miss it and the option evaporates, and now you are negotiating from scratch with no fallback and no time. Go find that date in your lease before you read any further. It is the single most expensive date in the document.

Count your alternatives before you argue about rent

Here is the part most tenants skip, and it is the part that determines everything downstream. Your negotiating position is a function of how many buildings could genuinely house your operation. That is a countable number, and I count it before I make a single call.

These are the commercial buildings in the 5,000–25,000 square foot range that exist in each city, from county property records. Again, existing is not the same as available, but you cannot lease from a set larger than this one.

A dash means fewer than sixty buildings in that band, which for practical purposes means you should be looking at neighboring cities too.

Read that table as a leverage map. An office tenant in Weston is choosing among 61 buildings inside their own city; an office tenant in Miami has 360. Those two tenants should not run the same process, and they will not get the same result from the same amount of effort. The Weston tenant needs to widen the geography early or accept that the alternative set is thin. The Miami tenant has enough competition available that a landlord who will not move on rate has a genuine problem.

The reverse case is just as useful. If you occupy warehouse space in Hialeah, there are 881 buildings in your size band inside that city alone, plus 751 in Doral next door. That is one of the deepest small-industrial markets in the country, and a landlord there knows it. Your renewal conversation should sound different from a Delray Beach industrial tenant's, where the in-city count is 65.

You can look at what has traded in any of these markets on the recorded sales pages, or start from your county hub.

What moving actually costs, all of it

Tenants routinely underestimate this, which is why landlords are comfortable pushing renewal rates. The honest list:

The build-out gap. Whatever the new landlord's allowance does not cover. In a region where most buildings in this size range predate 1990, that gap is usually larger than people assume. Older buildings need more work to suit a modern operation.

Double rent. Some overlap between the two leases is nearly unavoidable if you want to build out before you move. Negotiate to have it covered by abatement at the new space, but budget for it either way.

The move itself, plus everything attached to it. Movers, IT and phone cutover, new signage and the permits for it, licences that reference an address, printed material, the state and county registrations that need updating.

Downtime and productivity. The real number, not the optimistic one. For most operations this is bigger than the movers' invoice.

Customer friction. Genuine for retail and service businesses, close to zero for a back-office operation. Be honest about which you are.

There is a relocation cost calculator on the site that will get you a defensible first number in a few minutes. Use it before you go into the conversation, not after.

What staying costs that nobody prices

The renewal side gets treated as though its cost is zero, and it is not.

You are usually renewing into a space in as-is condition, which means the wear of the last term stays with you and any refresh comes out of your pocket unless you ask. A renewal allowance is a normal request and most tenants never make it.

Then there is the compounding. A renewal rate that is four percent above market does not cost you four percent once. Over a seven-year term with annual escalations stacked on top of an inflated base, the gap widens every year, because every escalation is applied to a number that was too high to begin with.

And there is the opportunity cost of the space itself. If your operation has changed, whether that is more people, fewer people or a different workflow, then staying means paying for a layout designed around how you worked five years ago. That is a real cost even though nothing on the invoice names it.

How I use a competing proposal, and how not to

The mechanism that moves a renewal rate is a real alternative, in writing, that you would actually take. Not a threat. Not a printout of asking rents. A proposal on a specific building from a landlord who wants you.

Two failure modes I see. The first is bluffing: waving an alternative you have no intention of taking. Landlords in this market talk to each other, and a bluff that gets called costs you more than never having made it. The second is the opposite: touring quietly, falling in love with a new space, and only then going back to the incumbent. Now you are negotiating with someone whose leverage you just handed over, because your body language has already told them you want to leave.

The version that works is unglamorous. You run a genuine process, you keep both paths live, and you let the incumbent landlord understand, through your broker rather than through you, that the alternative is real and priced. Then you make the decision on the numbers.

Worth saying plainly: I am paid by the landlord or seller on the other side of the deal, not by you, and that is true whether you renew or move. I have no financial reason to push you toward relocating. If anything the renewal is less work.

The sequence I actually run

For anyone who wants the mechanics rather than the philosophy, this is the order, working backwards from expiration.

Eighteen to fifteen months out. Pull the lease and find three dates: expiration, the renewal option notice deadline, and any holdover provision. Holdover rent is commonly 150 to 200 percent of the last month’s rate, so knowing what happens if the timeline slips changes how much slack you build in. Decide what the space needs to do for the next term, which is not always what it did for the last one.

Fifteen to twelve months. Survey the alternative set. This is where the counting above happens, and where it usually turns out that the honest field is smaller or larger than the tenant assumed. Tour the plausible ones. You are not shopping yet; you are establishing what exists and roughly what it costs.

Twelve to nine months. Get written proposals on two or three real alternatives and price the build-out on each. In parallel, ask the incumbent landlord for a renewal proposal. Ask for it in the same format as the others (rate, term, allowance, abatement, escalations) so the comparison is like for like rather than a rate against a package.

Nine to six months. Negotiate both paths at once. This is the only window where you genuinely have two options, and it is where nearly all the value gets created. Convert everything to an effective rate across the full term before you compare anything.

Six months and in. Decide, sign, and if you are moving, start permitting immediately. In most South Florida municipalities permitting and build-out is the longest pole, and it is the one nobody schedules enough time for.

If a lease audit has never been run on your current space, this is also the moment. I have found billing errors in operating expense reconciliations that were worth more than the rate concession being argued over, and a documented error is a useful thing to be holding when the renewal conversation starts. That is what a lease audit is for.

When renewing is genuinely the right call

Often. I say that as someone who would earn more from the other outcome.

Renew when the location is doing real work for the business: a retail trade area that performs, a commute your staff can actually commute from, proximity to customers who visit you. Renew when your build-out is specialised enough that reproducing it would cost more than several years of any rent saving. Renew when the space still fits and the rate, once you have tested it against the market, turns out to be defensible.

What you should not do is renew because the deadline arrived and there was no alternative. That is not a decision, it is a default, and the whole point of starting eighteen months out is to make sure you never have to take it.

Questions I get asked about this

When should I start a lease renewal negotiation?

Twelve to eighteen months before expiration. Leverage comes from having a real alternative, and building one takes months of touring, pricing and build-out estimating. Also find your renewal option notice deadline, which typically falls nine to twelve months before expiration — missing it removes your fallback entirely.

Is it cheaper to renew or to relocate?

It depends on a comparison most tenants never run properly. Moving costs include the build-out gap, overlapping rent, the move itself, signage and permits, downtime, and customer friction. Staying costs include as-is condition, a rate that compounds through every escalation if it starts above market, and a layout that may no longer match how you work. Price both across the full term rather than comparing monthly rent.

How do I know if my renewal rate is fair?

Test it against real alternatives rather than against asking rents. Ask your broker to bring back written proposals on buildings that could genuinely house your operation, then compare effective rates — all dollars across the whole term, including concessions and escalations. A rate is fair when a competing landlord will not beat it, not when it sounds reasonable.

How much leverage do I actually have in a renewal?

Roughly in proportion to how many buildings could house you. In the 5,000–25,000 square foot range, an office tenant in Miami has around 360 buildings in their own city while one in Weston has about 61; a warehouse tenant in Hialeah has 881 with another 751 next door in Doral, against 65 for one in Delray Beach. Count the alternative set before deciding how hard to push.

Should I tell my landlord I am looking at other space?

Not as a threat, and not before the alternative is real. What moves a rate is a written proposal on a specific building from a landlord who wants you, communicated calmly — usually through a broker, so you are not negotiating against your own body language. Bluffing is worse than saying nothing, because landlords in this market talk to each other.

Can I ask for improvements as part of a renewal?

Yes, and most tenants never do. Renewals are typically offered in as-is condition, which quietly transfers the wear of the last term to you. A renewal allowance for paint, flooring, restrooms or HVAC is a normal request, and it is far easier to get while the landlord still believes you might leave.

What happens if I miss my renewal option deadline?

The option usually lapses and you negotiate from scratch, without the fallback rate the option would have given you and often with too little time to build an alternative. Diary that date the moment you sign any lease. It is the most expensive date in the document.