How to Negotiate a Commercial Lease Renewal in Portland
Most Portland tenants treat a lease renewal like a formality — sign the landlord's proposal, maybe push back on the rate, and move on. That's a mistake. A renewal is one of the few moments in a commercial lease where tenants have real negotiating power, and most leave significant value on the table by not using it.
This guide walks through the key terms you should negotiate during a renewal, the mistakes that cost tenants money, and how to approach the process so you come out with a lease that actually reflects your position in the market.
Why Renewals Deserve More Attention Than Most Tenants Give Them
Here's the reality: your landlord doesn't want you to leave. Vacancy is expensive. Downtime between tenants, tenant improvement costs for the next occupant, broker commissions, and the risk of leasing at a lower rate — all of that adds up fast. In Portland's current market, depending on the submarket and property type, landlords can face 6–12 months of carrying costs on a vacant space.
That dynamic gives you leverage. But leverage only works if you use it before you've already committed to staying.
If you wait until 60 days before your lease expires to start thinking about renewal, you've already lost most of your negotiating position. The landlord knows you're not going anywhere, and they'll price accordingly. Start the process 12–18 months out and treat it like you're evaluating the market fresh — because you should be.
The Terms That Matter Most in a Renewal Negotiation
Tenants tend to fixate on the base rent number. It's important, but it's only one piece of the total occupancy cost — and sometimes not even the most impactful one. Here are the terms that deserve your attention.
Base rent. Obviously. But don't negotiate in a vacuum. You need to know what comparable spaces in your submarket are leasing for right now — not what they were leasing for when you signed your original lease. Pull recent lease comps, look at asking rates on competing spaces, and understand whether the market has moved in your favor or against you. In some Portland submarkets, particularly industrial, rents have increased significantly over the past few years. In others, like certain office corridors, landlords are offering concessions they wouldn't have considered in 2021.
Lease term length. Landlords generally prefer longer terms because they reduce turnover risk. That preference is worth something — use it. If you're willing to commit to a 5- or 7-year term instead of 3, that should translate into a lower rate, more TI dollars, or both. Conversely, if you need flexibility, expect to pay a premium for a shorter term, but understand what that premium should actually be based on current market conditions.
Tenant improvement allowance. Even on a renewal, you can negotiate a TI allowance. If your space needs updating — new flooring, paint, lighting, HVAC work, reconfigured office layout — the renewal is the time to ask. Landlords are often more willing to invest in improvements for a renewing tenant than tenants realize, because the alternative is spending that money (and more) to attract a new one.
Rent escalations. Your landlord's renewal proposal will almost certainly include annual rent increases. The question is whether those escalations are reasonable relative to the market. Fixed escalations of 3% per year are common, but depending on market conditions, you may be able to negotiate 2% or even flat rent for the first year. On a 5-year lease, the difference between 2% and 3.5% annual escalations is substantial.
Operating expense caps and base years. If you're in a full-service or modified gross lease, pay attention to how operating expenses are handled at renewal. Is the base year resetting? Are there caps on annual increases? In a triple net lease, understand how CAM charges have trended and whether there are protections you should negotiate — like caps on controllable expenses or audit rights.
Options and flexibility. Consider negotiating an expansion option if adjacent space might open up, a termination option if your business trajectory is uncertain, or a right of first refusal on nearby space. These clauses cost relatively little to include but can save you significant money and disruption down the road.
Five Mistakes Portland Tenants Make During Renewal Negotiations
Starting too late. This one costs more tenants more money than any other mistake. If you begin the renewal conversation with less than 6 months on your lease, you've effectively told the landlord you're staying. Your leverage evaporates. Give yourself 12–18 months, and use that time to evaluate the market seriously.
Not touring other spaces. Even if you plan to stay, touring comparable spaces does two things. First, it gives you real data on what the market looks like — actual asking rates, concessions, and available inventory. Second, it signals to your landlord that you have alternatives, which changes the tone of the negotiation entirely. You don't have to bluff. You just have to be genuinely informed.
Negotiating only on rent. As outlined above, the total occupancy cost includes TI, escalations, operating expenses, and the value of any options or flexibility clauses. A tenant who gets a slightly lower base rent but accepts aggressive escalations and no TI may end up paying more over the term than one who accepted a marginally higher rate with better overall terms.
Accepting the first proposal. A landlord's initial renewal proposal is exactly that — an opening position. It's designed to leave room for negotiation. If you sign it as-is, you've accepted terms that were never intended to be the final deal. Always counter, and always do so with market data to support your position.
Not engaging a broker. Tenants sometimes assume they don't need representation for a renewal because they're not moving. That's backwards. A renewal negotiation is one of the highest-value moments in your lease lifecycle, and a broker who knows the submarket can tell you whether the landlord's proposal is fair, what comparable tenants are getting, and where there's room to push. In most cases, the landlord pays the broker's commission, so the cost to the tenant is zero.
How the Negotiation Actually Works
Here's a simplified version of the process when it's done well:
Months 12–18 before expiration: Begin evaluating the market. Review your current lease terms, identify what's working and what isn't, and start touring comparable spaces. If you're working with a broker, this is when you'd engage them.
Months 9–12: Your broker prepares a market analysis showing comparable lease rates, concessions, and availability. You develop a clear picture of your alternatives — both staying and relocating.
Months 6–9: The landlord sends a renewal proposal (or you initiate the conversation). You counter with a proposal supported by market data. There may be 2–4 rounds of back-and-forth depending on the complexity of the deal.
Months 3–6: Terms are finalized and the renewal amendment is drafted, reviewed, and executed. If TI work is involved, planning and permitting can begin.
The timeline can compress for simpler deals or extend for larger, more complex ones. But the principle is the same: early preparation creates leverage, and leverage creates better outcomes.
When It Makes Sense to Relocate Instead
Not every renewal is the right call. If any of the following apply, you should be seriously evaluating relocation as part of your renewal strategy:
Your current space no longer fits your operations (too small, wrong configuration, inadequate loading or power)
The submarket has shifted and better value exists elsewhere
Your landlord is unwilling to invest in the building or address deferred maintenance
You've outgrown the location and your employees, customers, or logistics would benefit from a move
The renewal rate is significantly above market and the landlord won't negotiate
A good broker will help you weigh the cost of relocating (moving expenses, downtime, new TI buildout) against the cost of staying in a space that doesn't serve your business. Sometimes the numbers clearly favor one option. Sometimes it's close, and the decision comes down to operational factors that don't show up on a spreadsheet.
If you're evaluating a move, our guide on when to start a commercial site search covers the timeline and process in detail.
Get the Renewal Terms You Deserve
A commercial lease renewal is not a formality — it's a negotiation. And like any negotiation, the outcome depends on preparation, information, and timing.
If your lease is expiring in the next 12–18 months, now is the time to start. Reach out and I'll walk you through what the current market looks like for your space type and submarket, what terms are realistic, and whether your landlord's proposal reflects fair market value — or leaves room to negotiate.
Contact Matt Lyman
503.225.8454 | MattL@norris-stevens.com
Norris & Stevens | 900 SW 5th Ave, Floor 17, Portland, OR 97204