How to Properly Negotiate a Commercial Lease

Summary: Saving money is one of the most important parts of running a business. Much of it can be save by negotiating the terms on the commercial lease that you’re about to sign.

One of the most important steps of starting a business of your own is obtaining a commercial lease. Negotiating a lease that works in favor to you may not be easy but there are a variety of strategies that you can utilize to find one.

The Lease Length

Once you and your team have established grounds for your business, you’ll need to complete your commercial rental application and apply for a real estate lease. One of the first issues you may run into is determining the length of a lease. You can opt to consult with a construction claims management company if you wish for legal advice – which may be of help if you’re a first-timer.

Make sure the length of your lease is realistic. A term of one to two years is ideal for most small businesses, with an option to renew. The great thing about this term is that it doesn’t commit you for too long and also grants you the option to stay if you’re successful.

If you feel like moving to another location, a shorter lease may be better for you in the case that rent starts to go up or down. However, if your business is solely relying on location and foot traffic, like a restaurant for instance, you will want to secure it as best as you can.

Comparable Prices

The overall price you’ll pay throughout the lease should be considered first and foremost. Make sure to look around for properties and the going rates in your prospective area so you can negotiate a fair price. Part of this process includes specifying rent increases, so you don’t end up paying more than what you’re making. Also, try and work out a cap on these increases so its affordable for you to stay in this location. Furthermore, you can also look to negotiate the security deposit amount as well as the return conditions.

Be On the Lookout for Hidden Costs

There are various commercial leases that will hold the tenant responsible for certain costs like maintenance. Lyle Charles, of Lyle Charles Consulting, recommends getting the details of these costs upfront and look to negotiate it to be as fair as possible – remember it needs to be mutually beneficial for both sides. Make sure you find out if your business will be responsible for maintenance and learn about the conditions of the building beforehand so you can estimate how much you’ll end up paying. Remember, if there are any previous damages in the internal structure or around the place, you may end up having to pay for repairs if anything were to damage it. Negotiating plays a major role in whether the landlord will take on any unnecessary costs that will ultimately be coming from you pocket.