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3 Tips for Negotiating A Commercial Lease

3 Tips for Negotiating A Commercial Lease

After an entrepreneur and/or business owner finds the location that suits their business, negotiations for the commercial lease for the location will follow. Staying grounded, realistic and professional will help you make better decisions, as negotiations can be a long and laborious process. Hiring a Commercial Realtor or Tenant Rep will help ensure the process is streamlined and the result is beneficial to you and your business.

3 Tips for Negotiating A Commercial Lease

Prepare yourself with knowledge

Before you go into negotiations for a commercial lease, prepare yourself by doing a little research. Hiring a real estate professional is a great choice for handling the procedure but knowing a bit of information yourself will be beneficial as well. One thing would be to know the lingo that will be used, such as what the various types/categories of leases there are (full service, gross, net, triple net, or percentage).  Some types are associated with specific property types too. In the end it is the lease document that defines what is included – not always what is not included.

Know what length you need and want

How long with that location work?  Is it too much space or too little space for a three or five year period? Who will pay for the tenant improvements? Length of lease term can have benefits for both the tenant and the landlord.  Often a new business looks for a lease term of 2-3 years is ideal to allow for making sure it’s a good fit and the business is viable. Longer leases can bring in a better rate though, so make sure to talk to a qualified commercial realtor or tenant rep to help you figure out the best deal for your needs. Also, having the option to renew is important and will be explicitly stated in the lease, as will be the ability to sublease, so figure out what your needs are before you enter negotiations.

Read the details carefully

Everything is in the details. Examine the lease thoroughly, even though it could be upwards of 100 pages (and beyond!) While hiring a qualified commercial realtor or tenant rep and a good real estate attorney  to examine the document and negotiate for you is a smart choice, examining it carefully yourself will be a second set of eyes in making sure you’re getting exactly what you want. This will also help you communicate better with your realtor. Items such as a termination clause, competition clause, common area maintenance (CAM) fees are all important to know and may or may not be clearly defined. Understanding what you’re responsible for, such as maintenance, repairs and upgrades, is imperative as each can greatly affect your bottom line.

Commercial lease negotiations can become tedious, but hiring a professional commercial realtor or tenant rep to examine the details can make this process much smoother. Contact PG Commercial Real Estate today to speak with someone that can assist you and your business in securing the best deal for the right property at the right price. And remember, everything is negotiable.  Market information and knowing the standards that are being used in the area can save you time and money.

Posted in: Commercial Real Estate

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