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How to negotiate the terms of your company’s lease

On Behalf of | Nov 18, 2022 | Commercial Real Estate |

Your business has been successful, and you find yourself thinking about expanding. Maybe you want to open a second location or simply acquire property nearby to complement your existing space. Perhaps so far you have sold products on consignment at other businesses and are now ready to open your retail storefront.

A commercial lease will be a major commitment for your business. Rather than simply signing the documents presented to you by your prospective landlord, it is typically much smarter to negotiate certain terms. How do you prepare to negotiate a lease with a landlord?

Consider what happens if you fail

No one wants to think about their business going under, but that is the reality for a significant portion of modern companies. A commercial lease is usually a multi-year lease, which is something you need to consider in your negotiations.

There are several ways that you can protect your cell from liability if the business fails. You could request a force majeure clause that allows you to close the business and end the lease in unusual circumstances like natural disasters or acts of terrorism.

You could also request a shorter term for your lease. If the landlord requires a multi-year lease, you might ask for a clause that allows you to sublet your space if you cannot continue operating your business there.

Think about the impact of your operations

A significant portion of your lease costs will be your maintenance fees. There is often some wiggle room to negotiate those fees, especially if you are one tenant in a building or office park with multiple units.

If you will have relatively little foot traffic or few employees, your use of those shared spaces like bathrooms and parking lots may be far lower than the use of other tenants. Based on the estimated scale of operations, the landlord might agree to reduce what you pay for some of those maintenance costs.

Discuss how your landlord can support you

From reevaluating security around the facility to making some adjustments to the building itself, there are several ways in which your commercial landlord could help support your company and set you up for success. You never know what they might do to help you succeed unless you ask.

Negotiating on your own behalf can’t be difficult, especially if you are not familiar with the jargon used in commercial leases. Bringing in professional help when negotiating a commercial lease could help you secure the most favorable terms possible.