How to Negotiate a Commercial Lease
Negotiating the commercial lease for your company’s premises is probably not high on your priority list, given everything else you have to do every day.
But the outcome you get for your commercial lease will have a material impact on your business, whether you like it or not, for better or worse.
Are you negotiating with your landlord? Here’s some key considerations to get the best possible outcome and protect your company’s interests.
Prepare to Negotiate Lease Terms
The monthly rental cost isn’t as concrete as you might expect. With careful negotiations, you may be able to get some sort of incentive or discount from the landlord for agreeing to a longer term.
On the other hand, your rent could go up over time the longer you agree to stay there. You can try to protect yourself from sudden cost jumps by stipulating in the lease exactly when the rent can go up and by how much.
Discuss Your Fit Out Plans and Needs
Don’t forget that you’ll likely incur a lot of expenses while fitting out the new property to suit the needs of your company. This is another critical matter to talk about with the landlord and include in detail in the lease.
Your landlord would likely be happy to negotiate to help you afford those costs. For example, perhaps you could get access to the property to fit it out before the lease term starts. Your landlord might offer to cover the costs of the fit out. Alternatively, you might negotiate for a discount or a few months rent-free while you put money towards getting the property in shape for your business.
Whatever arrangement you agree on, make sure it’s in writing in your lease.
You’ll want to ensure that you also have written permission to complete the fit out. And if the landlord will require you to make other changes to the property whenever you vacate it (such as special cleaning procedures or new paint or flooring), then make sure the lease states who will be responsible for those expenses.
Leave Room in the Lease for Your Business to Grow
Be careful that the lease doesn’t place any unreasonable limits on what your company can do.
For business growth purposes, you may need to sublease to other individuals or add new staff and services. You might have to change up your operations or layout many months or years after you sign the lease. So make sure that your lease leaves some room for those changes.
If there’s a clause in your lease that dictates the permitted use of the premises, try to negotiate that aspect to keep it as broad as possible.
Get Expert Help with Commercial Lease Negotiation
While the above tips can help you to negotiate a fair lease with your landlord, you will have the best experience and peace of mind if you rely the help of a tenant representative.
Only a tenant rep will have the knowledge and experience necessary to secure a lease that works to your advantage. Tenant representatives work independent of real estate agents and landlords. They know the ins and outs of commercial leases, can identify risks and opportunities that you might overlook and they have special access to a wealth of resources that can help you to make a smart decision about a commercial property.
Work with experienced, trusted tenant representatives at Broadway Property. Contact us for a no obligations discussion about your needs.
- Ben Heritage and Ryan Stewart, Directors, Broadway Property