Tips for Negotiating a Commercial Real Estate Lease

Leasing commercial space is quite different from renting an apartment or house. Commercial renters’ needs vary greatly from one business to the next, so commercial leases tend to be much more customizable. Parties to commercial rental agreements are also assumed to be on equal footing, so the legal protections that apply to residential leases do not always apply in the commercial context. When negotiating a commercial lease, these tips can help you navigate the process.

Get Professional Help

Commercial real estate leases have many moving parts, and you’ll be better off consulting with a real estate attorney throughout the negotiation. First, a lawyer can help you understand the lease and the implications of all of its clauses, so at the very least, you know what you’re getting into. Just as importantly, a lawyer can propose alternatives that you might not know and help you put together a counter-offer that is more advantageous to your business.

Identify Your Business’s Real Estate Needs

It may sound obvious, but knowing in advance what your business requires in a physical location is immensely helpful for finding the right space and negotiating specific components of the lease. Ask yourself, what zoning requirements apply to your business? Do you need parking spaces for customers? Do you have any specialized utility requirements? Negotiating Specific Items in the Lease

Keep some of these key concepts in mind as you evaluate the lease.

• Duration – Landlords typically (but not always) favor longer leases and are willing to give you a discount for adding time to the lease. This may work in your favor, for instance, to help you lock down a prime retail location. However, if your business grows quickly, you may be stuck in an inadequate space.
• Additional Costs – Does the monthly rent cover everything, or will you be responsible for other costs? These can include common-area maintenance, property taxes, insurance, and more.
• Building Improvements – You may want to make changes to the premises to accommodate your business. You should identify what is permitted and who will pay for the work.
• Competitor Clause – If you are leasing space in a shopping center, can the landlord rent one of the other spaces to a competitor?
• Subleasing – If you want to leave the space before the end of the lease, can you sublease the space to another tenant?
• Termination Clause – Under what conditions may you or the landlord terminate the agreement? Can they kick you out for missing just one payment? If you leave early, are you required to pay the remaining time on the lease? 

Real Estate Expertise

With the future of your business on the line, the best course of action is to hire an attorney to help you negotiate your commercial lease. Our real estate team has years of experience in this field and is ready to advise you from start to finish. Contact us today to schedule a meeting.

Written By

Hoffman & Forde, Attorneys at Law