Across the greater Los Angeles, Inland Empire, Orange County, and other Southern California industrial markets, elevated vacancy and softer rental conditions continue to create meaningful negotiating leverage for tenants. Landlords remain motivated to retain high-quality, creditworthy tenants rather than absorb the costs and uncertainty of vacancy and downtime.One of the most effective strategies available to tenants with time remaining on their existing leases is the Blend-and-Extend approach.
A Blend-and-Extend is a mid-term lease amendment in which the tenant agrees to extend the lease term in exchange for a new blended rental rate. This rate is calculated as a weighted average of the tenant’s current contractual rent and today’s lower prevailing market rents. The result is typically an immediate or near-term reduction in the tenant’s effective occupancy cost, while providing the landlord with extended income certainty and reduced re-leasing risk.
Many Southern California industrial submarkets are experiencing elevated vacancy and downward pressure on asking rents compared to the peaks of 2022–2023. In this environment, landlords are often willing to restructure existing leases to retain strong tenants. By acting proactively—well ahead of formal renewal options—tenants can capture improved economics during this tenant-favorable period while securing longer-term rate and term stability.
Consider a tenant currently paying $1.35/sf NNN with 24 months remaining on a quality industrial facility. Current market comparables for similar space may range from $1.05–$1.20/sf NNN, depending on location, building specifications, and submarket.Through a well-structured Blend-and-Extend, the parties might agree to:
This structure delivers meaningful monthly savings for the tenant while giving the landlord multi-year cash flow visibility at a rate that remains above current spot market levels.
When properly structured and negotiated, a Blend-and-Extend creates a genuine win-win: lower occupancy costs and greater operational predictability for the tenant, paired with extended income stability for ownership.If you are a tenant in the greater Los Angeles, Inland Empire, Orange County, or other Southern California industrial markets and would like to explore whether a Blend-and-Extend makes sense for your situation, I am happy to analyze your lease, model preliminary scenarios, and, where appropriate, engage directly with ownership on your behalf — with zero obligation.
Frequently Asked Questions
Does a Blend-and-Extend require the tenant to give up any lease rights?
No. A Blend-and-Extend simply amends the rent and term of the existing lease. Other lease provisions typically remain intact unless both parties agree to modify them as part of the negotiation.
How long does a Blend-and-Extend typically take to negotiate?
Timelines vary by landlord and property, but many Blend-and-Extend negotiations can be completed in a matter of weeks once both parties see the mutual benefit.
Is a Blend-and-Extend only available to large tenants?
No. While larger, creditworthy tenants often have more leverage, landlords in a softer market are frequently open to restructuring leases with tenants of varying sizes when it helps avoid vacancy.
Does pursuing a Blend-and-Extend affect the tenant's future renewal options?
This depends on how the amendment is drafted. A well-structured Blend-and-Extend can preserve or even improve future renewal terms — which is why it's important to have the amendment reviewed carefully before signing.
If you are a tenant in the greater Los Angeles, Inland Empire, Orange County, or other Southern California industrial markets and would like to explore whether a Blend-and-Extend makes sense for your situation, I am happy to analyze your lease, model preliminary scenarios, and, where appropriate, engage directly with ownership on your behalf — with zero obligation.
Feel free to reach out or schedule a brief call to discuss your specific circumstances.
Ron Mgrublian
Principal, Lee & Associates Los Angeles – Long Beach
562-354-2537
rmgrublian@leelalb.com
CalDRE# 01902882
