In a market with elevated vacancy, tenants have leverage, but only if they use it. Many businesses renew without testing the market, or sign leases where the headline rent looks good but the operating expenses, escalations and fine print do not.
Start early
Begin 12 to 18 months before lease expiration for most small and mid-size tenants (longer for large tenants). Time is leverage: it lets you credibly consider alternatives and gives landlords time to compete.
Define your requirements
- Headcount today and in three to five years.
- Hybrid work patterns and how much space you actually use.
- Location relative to employees and clients.
- Parking ratio and cost.
- Image, amenities and building quality.
- Budget for rent, operating expenses and move costs.
Understand how rent is quoted
Houston office rent is commonly quoted on a full-service gross basis (rent includes operating expenses up to a base year) or on a net basis plus operating expenses. Compare total occupancy cost, not just the quoted rate.
Key economic terms to negotiate
Tenant improvement (TI) allowance
The landlord’s contribution to building out your space. In a tenant-friendly market, allowances can be substantial, especially on longer terms.
Free rent
Abated months at the start of the lease.
Escalations
Annual increases in base rent.
Operating expense protections
Base year, caps on controllable expenses and audit rights.
Flexibility
Renewal options, expansion rights, rights of first refusal and early termination options.
Run an RFP
Issuing a request for proposal to several buildings creates competition and makes offers comparable. Even if you plan to stay, a credible alternative improves your renewal.
Consider buying
If your business is stable and planning to stay for years, buying may beat leasing, especially with SBA financing. Read about the owner-user opportunity.
Frequently asked questions
When should I start looking for new office space?
Typically 12 to 18 months before your lease expires for small and mid-size tenants.
Who pays the tenant’s broker in Houston?
In most office transactions, the landlord pays the tenant representative’s commission under the listing agreement.
What is a tenant improvement allowance?
Money the landlord provides to build out or renovate your space, typically tied to lease term and rent.
How we help
We represent office tenants in space searches, RFPs, renewals and lease-versus-buy analysis. Learn more about our Houston office practice.
Have a deal or question in mind?
Talk it through with Apurva. A 20-minute call is usually enough to know your next step.
