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3 terms up for negotiation when signing a commercial lease

On Behalf of | Nov 18, 2021 | Commercial Real Estate

Signing a commercial lease is a major commitment. It may be one of the biggest expenses that your business has, at least until you start adding employees to your team. The terms of your lease will have a major impact on your business operations and even your profit margin.

Many people simply sign the document provided to them by their landlord without requesting any changes. However, certain terms in a lease may be open to negotiation. Reviewing and possibly negotiating the three terms below could help make a lease more beneficial for your business.

Your maintenance responsibilities and CAM fees

It is common for commercial landlords to pass the costs of property maintenance on to tenants. It is also common for them to assign some of those responsibilities to the tenants. If the lease passes on mechanical responsibilities to you, you may need to negotiate if those obligations are outside of your capability.

You may need to negotiate the common area maintenance (CAM) fees your landlord charges. If you will use those common areas less than other tenants because of your business model, your landlord may agree to reduce what they charge you.

The duration of your lease

Commercial leases often last for substantially longer than residential leases. Many times, they include terms that last for multiple years.

If you are a startup, you may want to only sign a lease for one year and then re-evaluate whether the business model is viable or not after a year of operations. If you run a successful business, you may want to limit the duration of the lease so that you can continue growing into bigger spaces. Your landlord may agree to reduce the length of the lease so that you have less at risk when you sign. 

What happens if you need to terminate early

Landlords often include terms in their leases that protect them if a business tenant needs to leave before the lease ends. Often, they will continue trying to charge you rent even after you vacate the premises. Negotiating what happens after you vacate the property or how to handle a closure of your business now can help you prevent major expenses right when your business can least afford them.

Thinking proactively about the needs of your business can help you set more favorable terms in your commercial lease.