Negotiating a favorable commercial lease can lead your business to success. Keep in mind that the landlord prepares a commercial lease to favor them. As a possible tenant, your responsibility is to read it completely, understand terms and conditions, and ask for changes that will favor you. If you want more negotiating power, you can let your real estate negotiate the lease for you. When negotiating, the following are some tips to guide you:
Consider the Length of the Lease
After finding and applying for a commercial real estate for lease, you will get real estate forms for the lease. It is important to work out on the length of the lease. A one-year or two-year term is often best for small businesses with the option to renew included. This offers you the option to stay if the place is a good fit. However, if your business is quite location-dependent and you want security, opt for a longer term.
Research Comparable Rents
In a commercial lease agreement, you must consider the amount of rent you will pay. Research the going costs in the area to negotiate a fair price. As you negotiate renewal options, specify rent increases to avoid surprises later. Your landlord may increase the rent for every additional year. Work out a cap on such increases to make sure you can still afford the lease and stay in that location. Also, consider negotiating the amount of your security deposit and the conditions for its return.
Be Aware of the Extras
A lot of commercial leases make the tenant responsible for costs like maintenance of common areas. Make sure to get the details of these costs upfront and negotiate this aspect. Ask the landlord if you will be responsible for specific systems maintenance and learn about the current conditions of such systems to estimate the costs. Find out if there are separate utility meters or if utilities are apportioned among tenants by square footage.
Ask for Favorable Modifications to the Lease
For instance, consider a clause that lets you sublease the property. Or you can ask for a clause that restricts the landlord from renting out any other unit on the premise to a similar business. With a co-tenancy clause, you can break the lease if a big anchor tenant leaves. Also, consider negotiating for the landlord to make improvements to the property before you move in. Ensure the landlord permits you to put up signage for your business.