What is a Relocation Clause?
Most office leases include a relocation clause which allows the landlord to relocate the tenant to another suite in the building or office park. Landlords use this provision to move small tenants to make room for larger, growing, and new tenants.
The relocation clause enables the commercial landlord to rent out more space and maximize income. This clause is almost always found in the first draft of a lease sent by the landlord.
What Can an Office Tenant do about the Relocation Clause?
Tenants should resist the relocation clause during the lease negotiation. Leased office space is usually chosen for its location, size, and price, among other reasons, and all of them are important. Why would the tenant want to move after they so carefully selected their office space?
Tenants should carefully review the lease, and retain a real estate attorney to review the contract. If a relocation clause is present, then push back against it in negotiations. Most landlords will not agree to drop the relocation clause, but larger tenants may succeed in having the provision dropped. At the very least, tenants should modify the relocation clause so they are properly compensated for any and all costs incurred during a relocation. Tenants should also ask for additional rent abatement if the landlord chooses to invoke the relocation clause. The landlord will usually cover the cost of the relocation.
At Golden Group Real Estate, we specialize in tenant representation for office users in the Chicago area, helping local business owners find office space and negotiate lease and purchase agreements. We never represent landlords, so we are prepared to negotiate aggressively on behalf of our tenant clients.
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