December 21, 2018

4 Negotiation Considerations for a Commercial Lease 

If you plan to have an offline presence for your business, at some point, you’ll be in a position where you must negotiate a commercial lease.

Commercial leases are different than residential contracts in that there is a lot more room for bargaining on various points. To ensure that you get all that you need for your business premises at a fair price, review these commercial lease agreement tips. 

1. Consider the Duration of the Lease Terms 

Commercial leases commonly go for longer than a year. Business owners like to know that they won’t have to take up stakes and move to another location. They know that it’s costly and complicated to get customers to sign with them. Plus, the cost of relocating heavy business equipment isn’t worth repeating every year. Commercial leases can cover almost any time duration, even up to ten years. But you may not want to lock yourself into such a long lease term. Consider how long you want to commit to the location, keeping in mind that when the lease renews your rent will increase. 

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2. Read the Fine Print for Hidden Fees 

It’s unlikely that your monthly lease payment will be just for the rent. Read the fine print on your lease carefully. Many commercial landlords charge for extras like common area maintenance. This fee, called “CAM,” covers support for lobby areas, elevators, stairwells, parking lots and more. While you may not like this extra charge, consider how convenient it is to have snow and ice removal services, plant watering services, trash removal and more for you, your employees and your customers. There may not be any room for negotiation on these charges since all the commercial tenants must share in the expense. 

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3. Negotiate for Favorable Terms 

There is a lot of room for negotiation on specific clauses. For instance, you can ask for better connectivity inside the office space if you’ll have multiple workstations for employees. Most commercial landlords will be happy to comply with this reasonable request for a valuable commercial tenant. You can also ask for things like permission to sublet some of your space in the event you need to downsize for any reason. You could request that your landlord not rent other units in the building to competitors. You could ask to have water, cooling or heating included in your lease. Another favorable term you should negotiate for yourself, if relevant, is the freedom to redecorate the office space for business branding purposes, including new paint colors, wallpaper, carpeting and more. 

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4. Research Comps 

Don’t mistakenly assume that all commercial lease rates in each area will be similar. There may be vast differences in rates depending on amenities, road visibility, parking availability and more. Decide what features you absolutely need and then research comparable office spaces to get the best price you can. 

These four things cover what you need to keep in mind when negotiating a commercial lease. Be sure to have your business lawyer look over your lease contract before you sign, too. Once you have all these covered, you can look forward to moving into your new business space!

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Image Credits: Commercial Lease from designer491 /Shutterstock

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