Smart Exit Strategies: How to Get Out of an Expensive Lease
By Chris Rohrer, Broker & Pete Kostroski, Broker | Rokos Advisors
For many businesses, real estate is one of the largest line items on the balance sheet. That makes being stuck in the wrong lease especially painful—whether it’s too much space, rising costs, or a layout that no longer supports the way your team works.
The good news is that being locked into an expensive lease doesn’t always mean being out of options. With the right strategy, business leaders can restructure, renegotiate, or repurpose their lease obligations in ways that protect cash flow and create flexibility.
Here are three of the most effective exit strategies.
Blend-and-Extend: Restructuring Instead of Walking Away
One of the most underutilized tools in lease negotiation is the blend-and-extend. This strategy involves renegotiating your current lease by extending the term in exchange for more favorable near-term economics.
For example, a tenant with three years left on a lease at above-market rates might agree to add a few additional years in exchange for reduced rent today, tenant improvement dollars, or other concessions. Landlords are often motivated to secure long-term occupancy, which creates an opportunity to relieve immediate financial pressure while still ensuring stability for the business. The key is structuring the deal, so the savings outweigh the commitment. For companies confident about their long-term location needs, a blend-and-extend can be a smart way to reduce costs without the disruption of relocating.
Early Termination: Negotiating the Exit
If the space no longer works—whether because of downsizing, relocation, or strategic shifts—early termination negotiations may be the best path forward. While most leases include penalties for breaking a lease, landlords often prefer a structured exit over a tenant defaulting or leaving space vacant.
An early termination agreement can take several forms:
A lump-sum payment that offsets the landlord’s downtime and re-leasing costs.
A structured payout over time that smooths the financial impact for both parties.
A negotiated “give-back” of part of the space if the tenant only needs to shed square footage, not exit entirely.
Though it requires careful financial analysis, early termination can often cost less than staying locked into an ill-fitting or overpriced lease for years. For companies facing major changes, it’s worth running the numbers.
Subleasing: Turning Unused Space into Cash Flow
When downsizing or hybrid work leaves portions of a space underutilized, subleasing can convert wasted square footage into income. A well-structured sublease offsets rent obligations and reduces the financial burden of carrying excess space.
Subleasing does come with challenges. Market demand, sublease restrictions in the master lease, and the competitiveness of rental rates all affect how quickly space can be backfilled. But for companies with more space than they need, subleasing remains one of the most practical ways to mitigate costs without immediately relocating. The best results come from proactively marketing the space and negotiating flexibility in the master lease to make subleasing easier.
Strategic Real Estate = Strategic Flexibility
Being in the wrong lease is expensive, but it doesn’t have to be permanent. Blend-and-extend negotiations, structured early exits, and subleasing strategies all create opportunities to save money and regain control.
The common thread across these approaches? Timing and strategy. Landlords are more willing to work with tenants who are proactive, informed, and transparent about their needs. For executives and business owners, the takeaway is clear: real estate decisions shouldn’t be left on autopilot. A lease that doesn’t serve your business is more than just convenient; it’s a drag on profitability and growth. The sooner you explore your options, the more leverage you’ll have to shape an outcome that works in your favor.
Is your lease costing more than it should? Connect with Rokos Advisors today to explore smart exit strategies that protect your bottom line.
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.