For decades, companies locked into rigid five-, seven-, or ten-year leases because that’s just how it was done.
Fixed costs.
Long commitments.
No flexibility.
Then the pandemic hit. Workforce behavior changed. Utilization changed. Business priorities changed. But most lease structures? They stayed the same.
That’s a massive problem. Traditional leases are a financial time bomb.
The costs aren’t just high—they’re rising, rigid, and out of sync with how work actually happens today. If your company is still stuck relying exclusively on long-term leases, you’re likely paying for space you don’t need, on terms that don’t favor you.
Corporate real estate trends have fundamentally changed, yet companies are still making the same costly mistakes:
These mistakes don’t just impact cash flow—they create dead weight in your real estate portfolio, limiting your ability to scale, adapt, or optimize costs. To avoid these costly pitfalls, explore how smart companies are making RTO work with flexibility built-in by downloading RTO: making it work.
Traditional leases come with hidden risks that can explode your costs over time:
| Hidden Fee | Description | Financial Impact |
| Operating Expense Pass-Throughs | Unexpected costs for building maintenance, security, and shared utilities passed to tenants. | Unexpected increases, sometimes 10-20% of base rent. |
| Property Tax Increases | Tenants may be required to pay a portion of increased property taxes over time. | Varies based on location but can add thousands per year. |
| Capital Expenditure Costs | Lease agreements may shift renovation or upgrade costs onto tenants. | Can range from minor to multi-million-dollar expenses. |
| Early Termination Penalties | Huge penalties for breaking a lease early, sometimes covering the full remaining term. | Often 6-12 months of rent or more. |
| Unused Space Costs | Paying for empty desks and unused square footage due to overestimation of space needs. | Can waste a percentage of rent. Typically 65% or more. |
| Fixed Utility and Maintenance Fees | Locked-in fees for utilities and services, even if usage decreases. | Non-negotiable, adding thousands in fixed costs. |
| Legal and Administrative Fees | Costs for lease negotiations, renewals, and modifications are often overlooked. | Legal fees range from a few thousand to tens of thousands. |
| Restoration Costs at Lease End | Landlords may require tenants to restore a space to its original condition, adding unexpected exit costs. | Restoration can cost $10-$50 per square foot or more. |
The companies getting real estate right today aren’t just downsizing—they’re rethinking workspace strategy. Here’s how:
The new approach:
Smart companies don’t make real estate bets on gut instinct. They use:
The old approach: Office space as a fixed cost.
The new approach: Office space as an operational resource—scalable, flexible, and optimized for performance.
Real estate is no longer a passive asset—it’s a strategic tool. Companies that cling to outdated leasing models will be stuck with expensive, underutilized space.
The ones that build flexibility into their lease structures, leverage workplace data, and embrace dynamic portfolio management will control costs, optimize space, and stay ahead of the curve.
The real question isn’t whether companies need to rethink office leases.
It’s how fast they can do it before they get left behind.
RTO: making it work isn’t just another return-to-office playbook—it’s a strategic guide to designing flexible, shock-absorbing workplace models.
Inside, you’ll find a practical framework to optimize your real estate portfolio, reduce costs, and boost employee satisfaction—backed by real-world examples from companies already reaping the hybrid dividend.
Leaders who rethink now are outperforming those who wait.
👉 Download the RTO: making it work guide.
Or talk to our enterprise team about how to turn those insights into action—fast.