The Lease That Looked Good on Paper – Until It Crushed the Budget
By Chris Rohrer, Broker & Pete Kostroski, Broker | Rokos Advisors
Not every lease that checks the right boxes up front ends up being a smart financial decision. In fact, some of the most attractive deals on the surface – competitive base rent, quick landlord concessions, move-in-ready space – are the same ones that end up quietly straining a company’s budget months down the line.
If you’ve ever signed a lease that seemed like a win but didn’t age well, you’re not alone. These hidden-cost traps are more common than most executives realize.
When “Cost-Effective” Becomes Costly
It often starts with a sense of urgency:
A lease expiration is looming. The team needs to stay operational. And the new space checks the major boxes. So, when the rent comes in under budget, it feels like a win.
But here’s where it breaks down:
Buildout allowances fall short of what’s needed for your actual layout or infrastructure requirements.
Operating expenses (OPEX) escalate rapidly, outpacing your original budget forecasts.
Hidden clauses around restoration, maintenance, or after-hours HVAC kick in later and add up fast.
Space inefficiencies leave you paying for square footage you’re not truly using.
Suddenly, what looked like a great deal becomes an ongoing financial headache – not because of one major cost, but due to a series of small, overlooked factors that accumulate.
Budget Impact Beyond Rent
Many executive teams evaluate leases based on rent per square foot. But that’s just one part of the financial picture, A few often-overlooked variables that can drive costs higher:
Tenant Improvement (TI) Gaps: Landlord contributions may not reflect current construction costs, leaving you to cover the overage.
Escalation Clauses: Fixed increases or pass-through expenses can compound quickly over a multi-year term.
Flexibility Penalties: Long lease terms that seemed like stability can limit agility – and lead to costly sublease or exit situations later.
What’s on paper may look clean. But it’s the execution – how that lease aligns with your team, operations, and financial forecast – that ultimately determines value.
What Smart Tenants Are Doing Differently
Executives leading with foresight are asking more strategic questions:
Will this space still works for us two to three years from now?
Are we truly protected against cost increases and buildout overruns?
What contingencies are built in if the market, or our business, shifts?
They’re also leaning on advisors to stress-test lease scenarios before signing. Because the best deal isn’t just the cheapest rent – it’s the lease that supports your goals without compromising financial discipline.
Don’t Let a “Good Deal” Become a Long-Term Liability
If you’re navigating a lease renewal or searching for new space, now’s the time to dig deeper than the base rent.
Want a second look at a lease you’re considering—or already in? Connect with Rokos Advisors today. We’ll help you catch what the paper doesn’t show.
Rokos Advisors is an award-winning Minneapolis - St. Paul based commercial real estate/tenant representation firm specializing in helping businesses find the perfect office or industrial space for their company.