Your New Space Isn’t Ready. What Happens to the Old Lease?

When a relocation schedule extends beyond the existing lease expiration, a project delay can create significant lease exposure.

Originally published July 2012. Updated October 2026 to reflect current owner-side lease and project planning considerations.

A company plans to move when its existing lease expires.

The new lease is signed, design is complete, and construction is underway.

Then the schedule slips and the new space will not be ready before the old lease expires.

Now the company has two problems: finishing the new space and determining whether it can remain in the old one.

That is where a lease holdover can become a very expensive project issue.

What Is a Lease Holdover?

A holdover occurs when a tenant remains in leased premises after the lease term has expired.

What happens next depends on the lease, applicable law and the circumstances. The lease may provide for substantially increased rent and other obligations during the holdover period. The landlord may also have commitments to another tenant or plans for the space that make continued occupancy particularly problematic.

This is why the actual lease language matters.

Before assuming the company can simply stay another month or two, have qualified commercial real estate counsel review the holdover provision and explain the potential consequences.

Read the Holdover Provision Before You Need It

Holdover language deserves attention when the lease is originally negotiated.

• How is holdover rent calculated?
• Does the provision change after a certain period?
• Are there notice requirements?
• Could the tenant become responsible for damages or other costs if remaining in the space interferes with the landlord’s plans?
• What rights does the landlord retain?

Those are questions for counsel during lease negotiations.

Years later, when the company is preparing to relocate, the project team should understand the answers as well.

A provision negotiated as part of a real estate transaction can eventually become a significant project risk.

Put the Lease Expiration on the Project Schedule

That coordination should begin well before the lease expiration becomes an immediate deadline.

If the new space is scheduled to be completed shortly before the existing lease expires, I would want to see the contingency.

• What happens if the permit takes longer than expected?
• What happens if a long-lead item arrives late?
• What happens if construction slips?
• What happens if an inspection, commissioning activity or certificate required for occupancy delays the move?

A project schedule showing completion two weeks before lease expiration may look acceptable until someone asks what those two weeks are protecting.

The existing lease expiration should be treated as a real project milestone, with the potential consequences of missing it understood by the team.

Don’t Assume the Landlord Will Give You More Time

A good relationship with the existing landlord can help, but it should not be the contingency plan.

The landlord may already have another tenant scheduled to take possession. Construction may be planned immediately after you leave. Financing or other commitments may depend on the space being delivered.

Even when the landlord is willing to accommodate an extension, the business terms may look very different when the tenant has only a few weeks left and nowhere else to operate.

If additional time might be needed, understanding the available options early gives the company more room to negotiate.

Connect the Lease to the Project

Lease administration and project delivery are often handled by different people.

The broker may understand the transaction. Counsel understands the lease language. The project team understands the construction and relocation schedule.

Someone on the owner side needs to connect them.

As the move approaches, I would want the team to be able to answer:

• When does the existing lease expire?
• What does the holdover provision require?
• When must notice be given if an extension or other arrangement is needed?
• How much contingency exists between substantial completion, occupancy and the lease expiration?
• At what point does a project delay require a conversation with the existing landlord?

Those questions should be answered while there is still time to act.

The Better Time to Deal With Holdover

The best opportunity to address holdover risk is during lease negotiations, when the provision itself can be reviewed and negotiated.

The next opportunity is during project planning, when the delivery schedule can be tested against the existing lease expiration.

Waiting until the new space is late leaves far fewer choices.

A lease holdover may begin with a construction delay, but its consequences can extend into rent, operations, negotiations and the landlord’s obligations to others.

Leadership Takeaway: Put the existing lease expiration and holdover provisions into the relocation risk discussion from the beginning. The owner should know what happens if the new space is late while there is still enough time to do something about it.