The New Zealand international's deal expires this summer, but Sam Allardyce is determined to keep him at the club and will make him one of the highest earners in the team.
If Reid does sign then it will help keep stability in the squad, but there has to be a question of whether he is worth the cost.
If Reid stays for the entirety of his contract he will end up costing the Hammers £23 million to keep, which is a sizeable amount of money for any club.
However, the 26-year-old plays such a vital role for the team that keeping him may be the best option, whatever the cost.
Reid has been linked with the likes of Arsenal and Manchester United in recent weeks and that is an indication of his quality.
A strong, but technically adept centre-back, Reid is the glue which holds the Hammers backline together and without him they look a much weaker outfit.
His role is more important than ever now, too. Ball-playing centre-backs are costly commodities in modern-day football and, with West Ham looking to play a productive style, he fits in well with Allardyce's current plans.
The Hammers have tried to play with more style than ever before and finding a cheap alternative to Reid, therefore, looks much harder.
Previously a limited defender may have been enough to cover for his absence, providing they had the defensive qualities to cope, but West Ham demand more now and Reid has the class to be able to perform that function.
There are few players on the market that would be able to do that job to a similar standard and finding one for a bargain value is sure to be a tough task.
West Ham also have their best chance of a lofty finish for some time. The club are in fifth position currently and having one of their key players free of any potential distractions over his future is likely to stand them in good stead.
If the Hammers can break into Europe than Reid is likely to pay back the cost of offering him a new contract in just one season and, with that in mind, giving him a new deal seems a no-brainer for Allardyce's men.