How To Negotiate A Commercial Lease

Written by Posted On Sunday, 14 January 2018 20:18

Negotiating a commercial lease can be daunting but it’s easier to negotiate a more favorable lease by asking for the terms in writing, including a personalized letter with the counteroffer and looking out for hidden costs. We spoke with Matthew Harris, a Senior Associate with Avison Young and expert when it comes to industrial real estate in Reno, NV in order to get a scoop on how to get a favorable lease.

Ask For The Terms In Writing

Having a document that shows the lease terms in writing ensures that there won’t be any miscommunication on behalf of the agent. It can be used to show the seller why a particular counter offer was made. It will also buy you more time allowing you comparison shop for similar properties. Asking for the terms in writing does not bind you legally; it simply allows you to get a precise handle on what exactly is being offered.   

Include A Note With Your Counteroffer

Including a note with a counteroffer will allow you to add a personal touch and explain why your business would be the ideal tenant for the property. Matthew Harrison explains: “This can be particularly effective if there are multiple bidders for an in-demand property. It may take several days before both parties come to an amenable agreement. You may want to follow up after two days in order to remain on the landlord’s radar”.  

What To Include In Your Offer

Think of your offer letter as a sales tool with the intention of convincing the landlord why they should pick you over all the other applicants. You may want to include information about your business structure, how long you’ve been in business and the nature of your business.

Make sure to cover the length of the lease terms as available renewal options iif you don’t want to move after the lease is up. You may also want to negotiate rent increases when going over renewal options in order to avoid drastic rent increases.    

You will also want to address the condition of the property. Include any issues that need to be repaired or else you may be responsible for fixing it once you’re settled in. Include the occupancy date when you would like to take physical possession and move in.

Beware Of Hidden Costs

Find out if the renter will be responsible for additional costs including maintenance or clean up of shared areas. These costs can be an addition to the monthly rent. Find out what these costs are before you sign on the dotted line and negotiate in order to get the best offer.  

Understand The Termination Clause

Read over the termination clause closely and find out of you will owe the entire remainder of the lease in case you need to terminate the contract before the lease ends. A lease that allows you to pay one month’s rent will allow for more flexibility.

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