One of the first things many office tenants do when they need to expand their office space is call their landlord and ask for more space. This approach may seem to be the easiest route, but here is why that line of attack is a money losing proposition:

No leverage.  The moment you contact the landlord he/she knows that you have no intention of relocating to another office building.  They know most likely, you're not going to break up your operation and open a second office, which is usually ineffective.   You are not working with a tenant representative, so you're not seeing the unknown opportunities in the market such as better more economical office buildings, a lease buyout, competitive renegotiation, blend and extend, or sublease & relocate. You're evaluating whatever the landlord puts in front of you with absolutely no benchmark.   Because you're not evaluating and analyzing other potential transactions as compared to the deal the landlord is offering, they may end up passing on all kinds of hidden costs with an overall inefficient solution to you.  This may or may not happen but unless you know all of your options, you will not be in a position to create the proper leverage with your landlord or a new landlord for that matter.

Tenant Improvements.  Ok, the space the landlord has put in front of you actually works and the required tenant improvements is minimal.  You agree to take it and the landlord agrees to carpet and paint and move a few offices around.  You go ahead and sign the lease.  What could happen? The bathrooms are too small and not accessible by the disabled so the Landlord's permit gets rejected.  Now the bathrooms need to be modified.  Who pays for this? Now you recognize that the space in addition to not having the required amount of electrical outlets for workstations, equipment, etc, also does not possess the right amount of power. Who pays for this improvement? You move in and the heating, ventilating and air conditioning are not working.  Who pays to rebalance and improve the system if required? Of course we all know the answer to all of these issues which I have laid out is you do.  Many of you did not think to negotiate all of the parameters of the transaction that require negotiation.   The only negotiation that took place was what the landlord put in front of you.

Leaving Money on the Table.  In terms of expansion, right now could not be a better time.  the market is in your favor.  Why leave the terms for your existing space unmodified? It goes beyond the rate. How well are you protected from your landlord's default? How are operating expenses taken care of? What rights do you have to expand, contract or renew? What other concessions are available? Is parking abatement available?  You get the point.

Better Options.  I have been representing office tenants for a very long time.  Without a doubt, a high percentage of those tenants I exclusively represent start the process with no intention of relocating. Then, we take the requirement to the market and we negotiate significantly greater and more cost-effective alternatives in the market place. If ultimately we decide to expand in our current facility, the leverage we will have created by showing the landlord that we are not a captive tenant, but instead, an educated tenant results at the end of the day a much much better transaction with substantial savings and lower risk.

Going forward.

1. Hire on an exclusive basis a top tier tenant representative to evaluate your current situation, diagnose your requirement, evaluate all options and come up with a process to solve your particular and unique circumstances. In taking this approach, your landlord will see that you are willing to go the extra step and view your requirement from both the micro and macro perspectives.  Doing so in most cases will compel your landlord to provide the best overall terms possible meaning they will not only look at the rate but the concessions as well thereby giving you the best possible "effective" rate.  You will know this because throughout the process your tenant rep should be conducting ongoing financial cost comparison analysis.

2. While negotiating an expansion within your building, one of the most guaranteed ways to show that you're not captive is to put your space on the market for sublease while concurrently educating yourself on what the market has available to you.  Have continuing negotiations with your landlord during this "education" process.

3. Evaluate each facility with the help of your tenant representative.  The right team will analyze the chosen properties through analysis, proposal negotiations and experienced research.  This will further establish that you are taking the process seriously, not just taking what the landlord offers you