Keep Your Business In The Black When Negotiating A Commercial Lease
To paraphrase an old adage, there are three things that are most important in real estate: location, location, location. In this slowly recovering economy, the large number of vacancies in commercial buildings means that you may even have several desirable locations to choose from when selecting a site for your business.
But not so fast; simply having a location in mind does not mean you have to sacrifice favorable treatment in your lease agreement. With the help of an experienced real estate lawyer, you can negotiate terms in your lease that could save you thousands in the long run.
Rent is only the first of many important considerations
There are few things in commercial leases that are set in stone, so the details of your lease can usually be tailored to meet the individual needs of your business. That being said, there are a few general items applicable to most commercial leases where you will often find some wiggle room at the negotiating table.
The most glaring aspect of a commercial lease is the rent; of course, you want to get as much of a bargain as possible, while the landlord wants to get as much revenue as possible. Yet, there are many additional nuances to this dynamic. Timeframe often comes into play; commercial landlords generally like to lock in tenants for an extended period of time to guarantee a steady and reliable stream of revenue. If you are willing to commit for the long haul, you may be able to secure a lower rent.
You have to carefully consider the long-term prospects of your business, however. If your business does well, will you outgrow the space before the proposed end of the lease? What if you lock yourself in to an expensive lease that turns out to be unsustainable under your business model? You want to be sure to maintain some leeway to account for possibilities that may arise in the future. Many business owners go with one to two year leases that include an option to renew – remember, account for and negotiate rent increases when discussing renewal options.
In your lease negotiations, you should also pay attention to extras like upkeep fees, property taxes and utilities. Responsibility for these costs may be negotiable. If you are going to pay utilities or maintenance costs and your space is part of a business complex, it is important to know whether rates will be set by looking at actual individual usage or will simply be based on your proportion of the facility’s total square footage.
Finally, you may want to work in clauses to protect your business. For example, for a variety of reasons, you could end up having to move your business; you should reserve the right to sublet the space. Or, you might want to keep your landlord from providing nearby space to a direct competitor by working in an exclusivity clause. The key is anticipating scenarios that could impact your business and working preemptive solutions into the lease.
Negotiate the best deal with help from an experienced real estate attorney
In the commercial context, most experts agree that there is no such thing as a “standard lease.” To get the lease that fits the needs of your business, you need a legal representative who has your best interests in mind. Contact the Law Offices of Ethan A. Glaubiger today to learn more about the advantages of retaining legal representation before going into commercial lease negotiations.