A Right of First Refusal (ROFR) gives a tenant the contractual right to lease or purchase adjacent space before the landlord can offer it to anyone else. In commercial leases, it's most commonly used to protect a tenant's ability to expand. Whether a specific ROFR actually provides that protection depends entirely on how it's written.
How an ROFR works mechanically
The mechanics are straightforward. When the landlord receives a bona fide offer for the space covered by the ROFR — typically adjacent or contiguous space to the tenant's current premises — the landlord must first present that offer to the ROFR holder. The tenant then has a defined window, usually five to ten business days, to either match the offer and lease the space, or decline and allow the landlord to proceed with the third party.
If the tenant declines, the landlord is free to lease the space to the third party on the terms presented. If the third-party deal falls through or the terms change materially, the ROFR typically re-attaches and the tenant gets another opportunity.
ROFR vs. ROFO — the distinction matters
Two related but substantially different rights are often confused:
Right of First Refusal (ROFR). The tenant can match a third-party offer after the landlord has already negotiated it. Triggered by a specific third-party deal.
Right of First Offer (ROFO). The landlord must offer the space to the tenant first, before marketing it to anyone else. Triggered by the landlord's decision to market the space.
ROFO is generally stronger from a tenant's perspective because it gives the tenant the first chance to negotiate, rather than waiting to match someone else's deal. Both are negotiable; both belong on the table in any lease discussion where expansion is a realistic future need.
When an ROFR is worth having
A meaningful ROFR is worth negotiating when three conditions are true:
- The tenant has a realistic expectation of needing more space during the lease term
- The adjacent space covered by the ROFR would actually fit the tenant's operational needs
- The ROFR language is tight enough to be enforceable — defined space, defined response window, defined triggering conditions
Without all three, the ROFR may be illusory. Landlords sometimes include weak ROFR language to satisfy a tenant's request without providing real protection — broad carve-outs, ambiguous triggering events, or response windows short enough to be unusable. These provisions look like protection on the LOI and provide little in practice.
What matters for tenants
If expansion during the lease term is a genuine consideration, the ROFR (or ROFO) language deserves careful attention during lease negotiation. The specific space covered, the triggering conditions, the response window, and any carve-outs should all be reviewed closely. A generic “tenant shall have a right of first refusal on adjacent space” clause is not protection — it's a placeholder.
If expansion is not a realistic consideration, an ROFR is a negotiating chip that can be traded for something more valuable. Not every protection is worth including just because it's available.