How to Negotiate Commercial Lease in Your Favor
When it comes to how to negotiate commercial lease, there’s a lot of pressure on the tenant to get the best deal possible. After all, signing a long-term lease is a big commitment and you want to make sure that you’re not getting taken advantage of.
If you’re feeling lost or overwhelmed, don’t worry – we’ve got your back! In this guide, we’ll show you how to negotiate commercial lease in your favor so that you can get the space (and terms) that work best for your business.
Different Types of Commercial Leases
There are 5 different types of commercial leases:
- Single Net Lease or Net Lease: The tenant only pays for utilities and property taxes. The landlord pays for maintenance, repairs, and insurance.
- Net-Net or Double Net Lease: The tenant pays for utilities, property taxes, and insurance premiums for the building. The landlord pays for maintenance and repairs.
- Triple Net Lease: The tenant pays for all costs of the building, and the landlord pays for only structural repairs.
- Full-Service Gross or Modified Gross Lease: The tenant and landlord equally split structural repairs, utilities, property taxes, maintenance, repairs, and insurance in a single “base rent.” This is the most common type of commercial lease when it comes to multi-tenant buildings.
How to Negotiate Commercial Lease That Favor Tenants
If you’re looking to negotiate a commercial lease that favors the tenant, your best bet is to start by looking at LinkedIn, Twitter, and Facebook. These platforms can give you a good idea of what other businesses in your industry are paying for their leases, and they can also help you find a leasing agent who is familiar with your industry.
Once you’ve found a leasing agent, be sure to have a clear idea of what you’re looking to get out of the lease agreement before beginning negotiations.
If you’re looking to lease commercial space, be sure to get the terms of the lease in writing before submitting a counter-offer. This way, you can be sure that the landlord or leasing agent is held to their word.
If the landlord or leasing agent is reluctant to offer you a written document outlining the terms of the lease, be sure to ask for an email or a copy of the listing for the space. This will ensure that you have at least the basic leasing information in writing before you submit a counteroffer.
A lease is a legally binding contract, so it’s important to have the terms written down. A landlord’s representative or leasing agent is legally obligated to act in the best interest of the property owner.
If an agent misunderstood the landlord’s directions or attempted to alter them in any way, having the terms in writing can show the landlord that your counteroffer was made in good faith based on information from the leasing agent. This could help avoid misunderstandings that could lead you to make a too high or too low counter-offer.
It is important to have the terms of your commercial lease in writing for several reasons. First, it allows you time to research the lease and get advice from an attorney. Second, it allows you to compare the terms of this lease to other leases you may be considering. And finally, having the terms in writing protects you in case there is a misunderstanding about what was agreed to.
By asking for the terms in writing, you are not committing to anything. If you don’t like the terms, you can always counter them or turn them down.
How to Negotiate a Commercial Lease
Some commercial leases simply have a space for you to fill out your proposed lease price. These spaces often include a response or attachment for you to provide your counter-offer.
When you are looking to negotiate a commercial lease, it is important to have all of the initial terms in writing. This way, you can submit a formal letter or other documentation of your counter-offer. This will help ensure that both parties are on the same page and that there is a clear understanding of the terms of the lease.
This allows you to read over the lease carefully, consult a lawyer, or compare it to other lease agreements you might be looking at.
A written agreement is not binding.
While every lease is negotiable, some landlords and agents may be less flexible than others. Negotiation can take time, so be persistent.
If you haven’t received a response to your offer after one or two business days, it’s perfectly acceptable to follow up.
When you’re ready to negotiate your commercial lease, keep these tips in mind to get the best deal possible.
Common Mistakes When Negotiating a Commercial Lease
There are many common mistakes that business owners can make when leasing commercial space. It is always best to consult with a real estate lawyer for legal advice specific to your circumstances.
- Recycling lease agreements without updating terms
- Failing to verify the space you’re renting
- Breezing over your operating expenses
- Allowing an escalation clause to increase your rent exponentially
- Letting your emotions affect business decisions
- Relying on your landlord’s word that the property is approved for zoning
- Getting attached to one specific piece of property
- Consulting with “any” kind of lawyer
Whether it’s you or you’re renting out a property, make sure you read over everything in your lease. Make sure you know what you’re getting into, and don’t be afraid to ask for help.
If you’re looking to lease a commercial space, the best thing you can do is arm yourself with knowledge. By understanding the different types of leases and common negotiating tactics, you’ll be in a much better position to get the space (and terms) that work best for your business. So don’t delay – start reading up on how to negotiate commercial lease today!