Petra Durnin is the director of research and analysis for the Southern California market at CBRE.

Large office tenants are renewing their leases early. According to research from CBRE, office tenants occupying 75,000 square feet or more in the greater L.A. area and Orange County renewed their leases an average of 22 months in advance since 2012. This timing allows users to make the best economic decision and to weigh rising rents. The same report also showed that tenants leased an average of 135,000 square feet with an average lease term of 101 months.

“Large tenants begin evaluating their real estate needs early because they typically require significant lead time to find a new location if the economics or physical attributes of their space or the location don't work anymore,” Petra Durnin, director of research and analysis for CBRE Southern California and Hawaii, tells GlobeSt.com. “Also, large blocks needed to meet their requirements are difficult to find or for landlords to assemble. There are just 20 blocks of space 100,000 square feet and greater in L.A. County. This has prompted tenants with an average size of 135,000 square feet to renew an average 22 months early over the past six years.”

Most of the renewal activity for tenants in this size range took place in Downtown Los Angeles, followed by the Tri-Cities market, the South Bay and West L.A. While rental rates are rising, landlords, in general, will discuss an earlier renewal. “In spite of healthy demand from companies, landlords can face significant downtime and large improvement costs if a tenant moves, so they can be more motivated to discuss early renewal,” says Durnin. “The total cost of the renewal is almost always significantly less than relocating, so if the tenant's space needs haven't changed, they will most likely opt to stay. The disruption of moving is also a factor to sway a tenant toward renewing. If market conditions change, tenants can look at restructuring to save money.”