Option to Expand Under Office Leases

For office leases, the tenant's right to expand into additional or adjoining space in a building can be very valuable. After all, you want your business to grow, don't you?

These expansion options have several variations. First, you can have a fixed expansion option, where the tenant has a defined period of time in which to exercise the option on a defined space. Here is an example of this type of option:

Tenant shall have the right to occupy that certain space adjacent to its existing leased space, of approximately 1000 square feet, for an additional monthly rent of $500. Tenant must exercise this expansion option within 120 days of the date of this Lease by giving written notice to Landlord. In that event, all other terms of this Lease shall apply to this expansion space.

Click here for a sample Option to Expand Commercial Space Leased in Building.

Alternatively, the tenant can have a Right of First Offer on any space that becomes available in the building. The landlord under this alternative is obligated to first present any space available to the tenant before marketing it to third parties.

Finally, you can try for a Right of First Refusal on space. This obligates the landlord to bring to you first any deals he is willing to sign with third parties for space in the building and allow you to match the deal and preempt the third party.

Any expansion option can be helpful, so try to get what you can.

For more advice on the various options you should try to get included in your lease, be sure to read Options in Commercial Real Estate Leases.

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