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Lease Types and Structures

Right of First Offer (ROFO)

A lease provision giving a tenant the first opportunity to negotiate for additional space before the landlord markets it to anyone else — activating earlier in the process than a right of first refusal.

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Home › Glossary › Lease Types and Structures › Right of First Offer (ROFO)
Definition

A right of first offer (ROFO) is a lease provision giving a tenant the first opportunity to negotiate for additional or adjacent space before the landlord markets it to any third party. This differs from a right of first refusal (ROFR), which only activates after the landlord has already received a competing offer from someone else.

ROFO vs ROFR timing

ProvisionWhen tenant right activatesNegotiating position
Right of First Offer (ROFO)Before landlord markets space to anyoneNegotiating from a blank slate
Right of First Refusal (ROFR)After landlord receives a third-party offerMatching already-negotiated terms

What to watch for before committing

Response window length

Confirm the time you're given to respond to a ROFO notice is realistic for your internal decision-making process.

Good-faith negotiation requirements

Understand whether the landlord is required to negotiate with you in good faith before marketing the space elsewhere, or simply extend a single offer.

What happens if negotiations fail

Clarify what happens to your ROFO right if initial negotiations don't result in an agreement — can the landlord then market freely to third parties?

Defined space and duration

Confirm exactly which space the ROFO covers and how long the right remains in effect during your lease term.

Pricing mechanism

Understand how pricing will be determined for the ROFO negotiation, whether market rate, a formula, or open negotiation.

Recording the right

For significant ROFO provisions, consider whether the right should be recorded against the property to protect it through any building sale.

When you need to know this

  • Planning for future growth — securing early access to negotiate for adjacent space before it reaches the open market
  • Multi-tenant building strategy — protecting priority access to space that could become important for operations later
  • Negotiating a new lease — adding a ROFO as a way to preserve future expansion flexibility
  • Comparing ROFO vs ROFR options — understanding which structure provides a stronger negotiating position for your situation

Frequently asked questions

What is a right of first offer? +
A right of first offer (ROFO) gives a tenant the first opportunity to negotiate for additional or adjacent space before the landlord markets it to any third party.
What is the difference between ROFO and ROFR? +
A right of first offer (ROFO) activates before the landlord markets space to anyone, giving the tenant a blank-slate negotiation. A right of first refusal (ROFR) only activates after the landlord has already received a third-party offer, requiring the tenant to match those terms.
Which is better for a tenant, ROFO or ROFR? +
A ROFO generally provides a stronger negotiating position, since you're negotiating from scratch rather than matching terms someone else already agreed to, though both provide valuable priority access to future space.
What happens if I decline a ROFO offer? +
This depends on the specific lease language, but typically the landlord can then market the space freely to third parties, sometimes with your ROFO right protected again only if a certain time passes without a lease being signed.

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