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3 terms you may be able to negotiate in a commercial lease

On Behalf of | Nov 17, 2022 | Real Estate |

Signing a commercial lease can be a very important step for your company. It gives you a physical address, and you can often start counting down the days until you begin operations once you finally have facilities rented.

Of course, that lease can also be a massive financial obligation. By the time the lease ends and is up for termination or renewal, you may very well have paid hundreds of thousands of dollars to your landlord in rent.

Before you jump in with both feet and make this massive commitment, you might want to look at the terms of the lease and determine whether you may need to renegotiate one of the three matters below.

The duration of the lease

Commercial leases often require a commitment of two years or more, unlike residential leases which may go from month to month or last a single year. Especially for a business that is very new or experiencing rapid growth, a long-term commitment to one space may not be the smartest choice.

Discussing your needs with the landlord could result in a shorter-term lease that allows you to grow the space with your company or minimize your risk should the business fail.

Your percentage of the maintenance fees

Commercial leases are often in facilities with multiple tenants and shared amenities. Your landlord may provide bathrooms, parking lots and even security personnel. They will charge you common area maintenance (CAM) fees to cover their operating costs.

The number of employees you have and the amount of traffic into your business will influence how much you make use of those common areas. You may be able to negotiate a lower portion of those fees based on your estimated utilization of them rather than on the square footage of the unit you rent.

The inclusion of specialty clauses

Perhaps you want to rent property in a location notorious for major weather events, or perhaps you know that global economic disruptions would prevent you from operating because of the rare materials you require for your business model. Adding a force majeure clause could allow you to end the lease early when you have to close the business unexpectedly.

There could be other specialty clauses that you want to include in the lease, such as clarifications of the landlord’s maintenance responsibilities or special terms that reflect your business’s unique liabilities.

Landlords are often amenable to negotiations regarding the details of a commercial lease. Thinking about your company’s needs can help you make better arrangements when preparing to sign a commercial lease.

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