The “Etc.” That Cost a Chicago Tenant its Renewal Right

While a renewal option is one of the most valuable rights a tenant can negotiate, it is only as good as the language behind it. A recent Illinois appellate ruling is a reminder that a loosely worded option may not be there when you need it. Here is what happened, followed by some “do’s and don’ts” to consider based upon my 30+ years representing office tenants in Chicago and nationally.

What Happened

A Chicago dentist leased space in a West Loop office building in 2012. The lease included two five-year renewal options. Relying on those options, the tenant invested roughly $167,000 of its own money in the buildout, on top of a $40,000 allowance from the landlord.

As the initial term was winding down, the tenant gave timely notice to renew. Under the lease, the parties then had 30 days to negotiate the rent. They could not agree. The tenant sued to enforce its option and lost, both in the trial court and on appeal. See the appellate court’s order (September 30, 2026).

While this case involved a dental office, the court’s reasoning applies to any commercial lease, including office leases.

Why the Option Failed

The renewal clause provided that the renewal would be on the same terms as the original lease, except for the rental rate and other deal concessions, “such as free rent, tenant improvement allowance, etc.,” all of which were to be at fair market value. This language is not uncommon absent the “etc.”

Interestingly, the court did not have a problem with fair market value as the measure for rent. Had the clause stopped there, the court indicated it arguably would have been enforceable. The problem was everything else. The clause left the concession package open and, worse, ended with “etc.” Since no one could say what “etc.” included or what it was worth, the court found the option too indefinite to enforce.

Do’s

1. Define fair market rent. Spell out what “market” means: comparable space in comparable buildings in a defined submarket, for a comparable term and a tenant of comparable size and credit.
2. Build the concessions into that definition. Free rent, tenant improvement allowance and other concessions should be factors that the market rent determination must take into account, not separate items to be negotiated later.
3. Set a timetable. The landlord should deliver its determination of market rent by a date certain, and the tenant should have a set period to accept or object.
4. Include a tiebreaker. If the parties cannot agree, the lease should provide a binding process to set the rent. A common approach is “baseball arbitration,” where each side submits its number and a neutral broker or appraiser picks one.
5. Negotiate a right to rescind. Where you have the leverage, ask for the right to withdraw your renewal notice once the rent is determined.
6. Have your tenant rep and attorney review your existing renewal option well before your notice date. If the language is weak, the best time to fix it is the next time the landlord wants something from you, e.g., an amendment, expansion or early extension.

Don’ts

1. Don’t accept “etc.” or other catchall language. It cost this tenant its option.
2. Don’t rely on an “agreement to agree.” Ask yourself what happens if you and the landlord cannot agree on the rent. If the answer is that you keep negotiating, you have an invitation to negotiate, not an option.
3. Don’t count on good faith to fill the gap. The tenant here argued that the landlord at least had to negotiate in good faith during the 30-day period. The court held that once the option failed, so did any obligation to negotiate.
4. Don’t assume your investment in the space will protect you. This tenant spent six figures on its buildout and it did not save the option. If anything, the tenant with the most invested has the least leverage when an option fails, and the landlord knows it.
5. Don’t assume that vague language will be held against the landlord who wrote it. According to the tenant, the landlord drafted this lease. The landlord still prevailed by arguing that its own language was unenforceable.

Is Illinois an Outlier?

No. Courts across the country have wrestled with renewal options that leave the rent open, and the results vary. Some courts will not enforce an option unless the lease fixes the rent or provides a definite method to determine it. Others are more forgiving and will step in to set a reasonable rent, but that means litigating for the right to stay in your space. Either way, the tenant with vague language is negotiating from a position of weakness.

Note: this ruling was issued as an unpublished order, which limits its value as precedent in Illinois. Nonetheless, it is a good indication of how a court may treat renewal language that many tenants assume is safe.

My advice is to read your renewal option now, before you need it. For more on preparing for a renewal, see my earlier post on lease renewal strategies.

Don Wenig

Blackacre Advisors LLC

DISCLAIMER. This post is for general information only and is written from a real estate transaction perspective. Nothing in it is legal advice. Please consult an attorney about your specific lease.

Don Wenig
Blackacre Advisors LLC
info@blackacreadvisors.com
312-345-4778

DISCLAIMER.   Our writings are from a real estate transaction perspective and for informational purposes only. Nothing herein shall be considered legal, accounting, tax, or architectural advice. Please consult with the appropriate professional(s).