Jan 15, 2020

Negotiating Your Commercial Lease? Follow These 7 Tips

By Don Catalano


Negotiating Your Commercial Lease? Follow These 7 Tips
With commercial leasing, the first contract that a potential landlord presents you with should be thought of as a rough draft. Negotiations are a typical part of the leasing process, and the landlord fully expects you to request changes to the document. To ensure that you get the best possible deal, keep these tips in mind while you negotiate.


1. Don't Wait Until the Last Minute

Commercial lease negotiations are often lengthy. You're likely to find that it requires multiple in-person meetings and many emails and phone calls in between to close the deal. As a result, it's important that you leave plenty of time for negotiations to take place. Starting your commercial real estate search early can help you avoid making a hasty decision due to a time crunch.


2. Know the Market Inside and Out

You simply can't fairly evaluate lease agreements in a vacuum. In order to assess the deal you've been offered, you need a clear picture of the commercial real estate market in your area. Knowing the latest data will also allow you to negotiate from a place of power, as you can point out to the landlord where their terms fails to align with current trends.


3. Consider the Whole Cost Picture

Although it's easy to focus on getting the lowest base rent possible, your costs for occupying an office don't stop there. You'll also want to consider common area maintenance fees, insurance, property taxes and incidentals as well as any build-out costs that you'll need to cover.


4. Prioritize Your Needs

Negotiations are all about give and take. You may not be able to get everything from your wish list added to the lease. Taking the time to prioritize your needs will help to ensure that you win where the deal breakers are concerned and give up the smaller items that are less vital to your business.


5. Balance Term With Flexibility

Landlords prefer long-term leases and are more likely to accommodate requests for concessions and lower rental rates if you are willing to agree to a long-term lease. If you choose to go the long-term route, make sure that you have clauses added that will give you flexibility. Things like the sublet and assignment and early termination clauses can help to ensure that you have some protection in place for your company if your business needs change before your lease expires.


6. Keep Your Options Open

Make sure to always have a backup option in mind when you go into lease negotiations. In the event that you have to walk away from the deal entirely, you don't want to find yourself all the way back at square one.


7. Have an Advocate at the Table

If you only follow a single tip from this list, make it this one. A tenant representative broker can make a huge difference at the negotiating table by acting as your advocate. Their advice and assistance can simplify every step of the leasing process, and their services are paid for by the landlord, not your company.


Here are a few other articles to check out:

5 Steps to Getting the Best Office Deal

Tips When Opening a Commercial Space for Your Business

5 Technology Trends That Will Shape CRE in 2020


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Topics: Commercial Lease

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Don Catalano

Don Catalano