Commercial Lease Negotiations: 3 Areas Of The Lease To Use To Your Advantage

When you make the decision to purchase a business space, the landlord or commercial real estate company is going to provide you with a printed commercial lease. This lease will have been prepared by a lawyer or the landlord. As you go over this lease, you will notice that the terms mainly favor the property's landlord. This is common, but there are ways you can negotiate so that the terms can favor you a little bit more. Here are a few areas of the lease that you can use to your own particular advantage and how to do it:

Length

The first part of the lease that you should look at is the length, or the term. Usually, a short-term lease will be most beneficial for you, as this provides more flexibility for the ever-changing business. This is especially true if you're a start-up and you aren't sure if this location will work for you or if your business grows faster than you expected and you find that you need more space. However, a long-term lease provides you a more affordable business space for an expected amount of time, and landlords tend to be more lenient with concessions.

Your best option is to negotiate a short-term initial lease with an option to renew for several years. For example, you could do a one-year lease upfront with a two or three-year option renewal. The option doesn't have to be taken if the location doesn't pan out. However, if all works out for the business, then you'll have dibs on the space.

Subleases

You will also want to talk to the landlord about subleasing your business space. This way, if there is ever the need to move out of the space, you can sublease it to someone else. This will allow the rent to be paid without having to break the lease. Alternatively, if you rent a larger space to begin with for your business to grow into, you can sublease part of the location until you need the space.

Monthly Rent

The third area of the lease to take a close look at is the amount of rent that you will be expected to pay. Your first step is to see how much others are paying for a similar sized space. If the landlord is asking you for an unjustifiable amount of rent, ask for a reduction. Some simply won't even consider reducing the rent, especially if the market is tight. However, you may be able to talk them down temporarily, especially if you bring up compensating for moving expenses.


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