Navigating Industrial Lease Renewals: Strategies for 2025
The industrial real estate market in Northern Nevada and across the country has undergone a significant transformation over the past several years. Since 2019, average asking rents for industrial space have increased dramatically due to supply constraints, rising construction costs and surging demand driven by e-commerce, logistics and nearshoring trends. For tenants approaching lease renewal in 2025, the landscape looks very different than it did even a few years ago.
Northern Nevada industrial lease renewal strategies in 2025 with rising rents and tenant tips
Here are several key strategies for navigating lease renewals in the current market:
1. Start Early and Know Your Timeline Begin discussions 9–12 months before your lease expiration. Industrial landlords are increasingly firm on rates, and early engagement gives you time to evaluate your options, negotiate favorable terms or seek alternative locations if needed.
2. Analyze Market Comparables Don’t assume that your current rate is still reflective of market value. Engage a broker to provide comps on similar properties, factoring in location, clear height, loading and building age. In many submarkets, lease rates have increased 50% or more since 2019.
3. Leverage Your Tenancy Long-term occupancy, good payment history and minimal management issues make you a desirable tenant. Highlight your value to the landlord, especially if vacancy remains low or tenant replacement costs are high.
4. Consider Lease Extension Incentives Landlords may offer rent abatement, tenant improvement (TI) allowances or phased increases in exchange for a longer lease commitment. Evaluate these incentives against the cost and risk of relocating.
5. Understand Operating Expense Trends It's not just base rent that's going up, operating expenses (CAM, NNN, OPEX) are on the rise as well. Review the past 2–3 years of NNN or CAM reconciliations to anticipate future cost increases. Rising insurance premiums and property taxes are common pass-throughs.
6. Negotiate Renewal Options Clearly If your lease includes a renewal option, make sure you understand the terms. Are they at fair market value (FMV), or pre-negotiated? Push for pre-negotiated market increases and language that defines how FMV is determined to avoid surprises.
7. Factor in Your Growth Forecast If your business has been expanding, consider whether the current space meets your 3-to-5-year operational needs. Renewal may be an opportunity to expand, reconfigure or relocate if a better fit is available.
8. Work With a Tenant Rep Broker Landlords typically have professional representation—you should too. A tenant rep broker will advocate on your behalf, provide market data and identify leverage points to strengthen your position.
Conclusion
Lease renewals in 2025 require a strategic approach. With industrial rents at historic highs and demand remaining steady, proactive planning and knowledgeable representation are more important than ever. By starting early, understanding the market and knowing your leverage, tenants can secure favorable terms that support their long-term success.
