Your Commercial Lease Expires in 12 Months: Here’s Your Action Plan

If your commercial lease expires within the next 12 months, now is the time to start planning — even if you're perfectly happy with your current space.

Many small business owners wait until their lease is just a few months from expiring before deciding whether to renew or relocate. Unfortunately, waiting can limit your options, create unnecessary pressure, and weaken your negotiating position.

Whether you operate a warehouse, industrial facility, office, or retail storefront, starting early gives you time to make a thoughtful decision about what's best for your business.

Here's how to approach the final 12 months of your commercial lease.

12 months before expiration: review your current lease

Before you start browsing available properties, take a closer look at the lease you already have.

Pay particular attention to:

• Expiration date: When does your current lease officially end?
• Renewal options: Does your lease give you the right to renew, and under what conditions?
• Notice deadlines: Are you required to notify your landlord six, nine, or even twelve months before expiration?
• Rent increases: What happens to your rental rate if you renew?
• Restoration requirements: Will you need to remove improvements or restore the space when you leave?

This is also a good time to evaluate whether your existing space still meets your business's needs.

Are you running out of warehouse storage? Do you have more office space than your employees actually use? Would a different location improve your operations?

Even if you ultimately decide to stay, understanding your alternatives can help you make a more informed decision.

9–12 months before expiration: explore the market

One of the biggest mistakes business owners make is assuming their current lease terms are competitive without comparing them to the market.

Commercial rental rates, available inventory, and landlord incentives can change considerably over the course of a lease.

Start by researching comparable properties in your area.

For example, if your business occupies 5,000 square feet of industrial or flex space in Salt Lake City, you should understand what similar properties are available in surrounding markets such as West Valley City, Murray, South Salt Lake, and the broader Salt Lake Valley.

But don't compare properties based on advertised rent alone.

Consider:

• Total monthly occupancy costs, including operating expenses
• Location and accessibility for employees and customers
• Building functionality and room for growth
• Parking, loading access, electrical capacity, and other operational requirements
• Potential tenant improvements or moving expenses
• Lease length and flexibility

You may discover that relocating would improve your operations. Or you may find that your current space is still the best fit.

Either way, you'll have information to support your decision.

6–9 months before expiration: decide whether to renew or relocate

By this stage, you should have a clearer understanding of your options.

If you want to stay, begin discussing renewal terms with your landlord, keeping any contractual notice requirements in mind.

If you're considering relocating, start narrowing down suitable properties and evaluating the timeline required to make a move.

Remember that moving a business involves more than signing a new lease.

Depending on your operations, you may need time for:

• Permits and zoning approvals
• Tenant improvements or construction
• Equipment installation
• Utility and internet setup
• Inventory transfers
• Employee and customer notifications

Industrial and warehouse tenants may also need to consider electrical service, loading configurations, equipment requirements, and operational downtime.

For businesses requiring significant improvements or specialized space, the search and planning process may need to begin much earlier than six months before expiration.

3–6 months before expiration: negotiate and finalize your plan

Ideally, by this point, you've already evaluated your options and are working toward a final decision.

If you're renewing, don't assume the landlord's initial proposal is the only option.

Depending on the market, property, and your circumstances, potential negotiation points may include:

• Base rental rate and annual increases
• Lease term and renewal options
• Tenant improvement allowances
• Free or reduced rent periods
• Maintenance responsibilities
• Expansion or contraction flexibility

If you're relocating, you'll want to coordinate your new lease commencement date with your existing lease expiration to reduce unnecessary overlap and disruption.

Your specific lease obligations and business requirements will determine the best timeline.

Why having a tenant representative matters

Many small business owners don't realize they can have a commercial real estate professional working specifically on their side of the transaction.

A tenant representative helps businesses evaluate properties, compare lease options, and negotiate terms with the tenant's interests in mind.

Unlike an agent representing the landlord, a tenant representative works for the business leasing the space. (New to the idea? Read What Is a Tenant Rep — and Does Your Business Need One?)

And importantly, tenant representation is often compensated through commissions structured into the commercial real estate transaction, meaning businesses may not have an additional out-of-pocket brokerage fee. Compensation arrangements vary and should always be confirmed in advance.

At Hammer Realty & Co., we focus on representing commercial tenants and buyers throughout Salt Lake City and Northern Utah.

We can help you:

• Evaluate whether renewing or relocating makes the most sense
• Identify suitable industrial, flex, office, or retail properties
• Compare the full costs of different leasing options
• Negotiate lease terms that support your business goals
• Navigate the process from initial search through lease execution

We represent tenants and buyers — not landlords — so our focus is on helping businesses make informed real estate decisions.

The bottom line: don't wait until your lease is almost up

You don't need to be unhappy with your current space to start evaluating your options.

In fact, the best time to explore the market is often when you're not under pressure to make an immediate decision.

Starting 12 months before your lease expires gives you time to understand the market, evaluate alternatives, and negotiate from a more informed position.

And if you decide your current space is still the best option? That's a valuable conclusion, too.

This article provides general commercial leasing information. Individual lease provisions, notice requirements, and negotiation options vary. Consult qualified legal counsel regarding your specific lease obligations.