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Commercial Property Space: Three Critical Tips for Negotiating Your Lease

If you are planning on leasing commercial space for your business, you should prepare to negotiate for the best long-term results. In general, the legal terms of leasing business property are negotiable. However, your negotiating ability will depend on the status of your local rental market. For instance, if there are numerous suitable spaces in the same area, you might be able to negotiate concessions. Here are some practical tips to help you obtain the best lease conditions.

Avoid Over-Committing

You should decide on the best term of lease before moving to the other elements of the agreement. Often, leasing a building for a prolonged period seems beneficial, but it takes away flexibility. Therefore, you should negotiate a short lease term of about one or two years. Also, you should make sure that you have the option to renew the agreement. You should note that there are rent increases during lease renewals. So, you should discuss the details of the rent increase over the original contract to avoid unexpectedly high increases.

Understand the Add-on Expenses

You should not commit to the lease agreement immediately just because the basic rental fee is affordable. Typically, commercial spaces come with additional charges which can exponentially increase your total expenses. For example, you will be charged for the upkeep of the shared areas, the maintenance of your space and provided utilities. It is important to understand the specific add-on charges and the method of calculation during the leasing process.

The knowledge can help you negotiate for reduced charges. For example, you should ask about the utility charges. Some buildings have individually metred setups while others are shared. If your case is the latter, you can negotiate based on your square footage or the nature of your business. You should also check the conditions of maintenance and repair of the building. Some leases dictate that the tenant will be responsible while in others, the cost is shared with the landlord.

Protect Your Business Through Clauses

There are some commercial property lease oversights which can compromise your investment. If your bases are not appropriately covered, you could lose your business. Therefore, you should negotiate some important clauses to safeguard your enterprise against harmful interference related to your leased space. For example, you should discuss issues such as exclusivity, subleasing and co-tenancy. If the conditions for lease are not favourable, you should explore alternative options.

If you are uncertain about the terms of commercial space lease, you should consult an experienced property lawyer for counsel.


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