In most commercial leases landlords typically insert a relocation provision that gives them the right to relocate tenants within their office building to accommodate a larger tenant. Now keep in mind they can’t break your lease however if they have space available within their office building they reserve the right to relocate you.
While a tenants ability to strike this clause depends on the amount of square footage they lease no tenant whether big or small should JUST accept it. They should do whatever they can to have that clause removed since the location in the building, configuration, and views were a major reason whey they leased the space in the first place.
Why would the landlord insist on having a right to relocate clause in the lease?
Keep in mind that landlords would not ever pull the trigger on this UNLESS they could realize a financial gain. For example, let’s say you occupy 1,000 sf that is adjacent to another 15,000 sf vacancy. If prospective tenant wants to lease 16,000 sf and the only way the landlord can make the deal is if they relocate you then they need to have this clause. Otherwise the landlord loses a 15,000 sf office lease opportunity all because they could not relocate a 1,000 sf tenant. Obviously they make more on the larger tenant. If a landlord could not relocate the tenant then their only option would be to buy them out of the lease
When should a tenant accept the terms of a relocation provision?
More times than not landlords are never put into situations where they have to relocate tenants however they still want to retain that right. If you are a tenant that has no choice but to accept the possibility of being relocated then you’ll want to ensure you ask for the following in your lease contract.
- Landlord shall pay for 100% of all costs associated with the tenants relocation including but not limited to tenant improvements, phone/data cabling, moving costs, stationary and marketing, and all other costs associated with moving.
- Relocation space shall be the same size and configuration with the same # of hard walled offices, windowed views, and other improvements comparable to the existing space.
- If relocation space is larger than existing space tenant shall not have to pay anymore rent than what was due on existing space.
- If tenant is not satisfied with relocation space then tenant shall have the option to cancel the lease.
Obviously relocation provisions are not desired by tenants however if you are small you don’t have much negotiating power. If that is the case then just make sure you insert language in the lease contract that protects you.
