Commercial rental agreements, also known as commercial leases, require tenants to pay rent to their landlord for the use of commercial premises. The details of these contracts can often be complex and difficult to negotiate. However, with the right strategies, it's entirely possible to effectively negotiate your commercial lease. In this article, we share ten practical tips to help you successfully negotiate your commercial lease.
- Do some preliminary market research
Before you start negotiating your commercial lease, it's important to do some preliminary market research. This will give you a clear idea of the rental value of commercial premises in your catchment area. At the same time, you'll be able to identify the advantages and disadvantages of different neighborhoods, as well as the leasing opportunities that exist.
- Be prepared before you start negotiating
Preparation is the key to successful commercial lease negotiations. It's vital to know your business needs, financial limitations and location priorities. If you know what you want and what you can offer, you'll be better equipped to negotiate effectively.
- Establish a relationship of trust with your landlord
The relationship between landlord and tenant is important to the success of the negotiation. Try to establish a relationship of trust with the tenant from the very start of the negotiations. This can be beneficial for both parties, as it can help you better understand your landlord's needs and negotiate successfully.
- Negotiate the lease term
The lease term is one of the most important aspects of negotiating a commercial lease. Try to negotiate a lease term that suits your business. If you plan to stay in the commercial premises for an extended period, try to negotiate a longer lease term. This can help you avoid unexpected rent increases and ensure the stability of your business.
- Negotiate the rent
Rent is another important aspect of negotiating a commercial lease. Try to negotiate a rent that suits your budget. If you can demonstrate that you are a responsible and reliable tenant, your landlord may be more willing to negotiate a lower rent. Don't forget to negotiate three-yearly rent review clauses too, to avoid excessive rent increases.
- Negotiate rental charges
Rental charges can represent a significant proportion of the cost of occupying your commercial premises. Try to negotiate rental charges with your landlord to make sure you're not paying for services you don't use. Don't forget to check the breakdown of charges between tenants to make sure you're paying a fair share.
- Negotiate resolutory clauses
Resolutory clauses are important provisions in commercial leases. They determine the conditions under which the lease may be terminated before its term. Try to negotiate these clauses to ensure that you have a sufficient level of protection. If you are a responsible tenant, you may be able to negotiate clauses that are more favorable to you.
- Negotiate the work to be done
Before signing a commercial lease, it's important to ensure that the premises are in good condition. Try to negotiate with your landlord any work that needs to be carried out before the premises can be occupied. If any work is required, try to negotiate that the lessor will pay for it, or that you will be financially compensated for it.
- Negotiate renewal options
If you plan to stay in the commercial premises for an extended period, try to negotiate lease renewal options. This will enable you to extend your commercial lease at the end of its initial term. Don't forget to negotiate renewal conditions, such as rent, service charges and work to be carried out.
- Call in a specialist lawyer
Negotiating a commercial lease can be complex, and requires a good understanding of the applicable laws and regulations. It is therefore advisable to call on a lawyer specializing in commercial leases to assist you in your negotiations. A lawyer can help you understand the terms of the lease, negotiate more favorable clauses and protect your interests as a tenant.
In conclusion, effectively negotiating your commercial lease can help ensure the stability and success of your business. By applying these 10 tips, you can successfully negotiate your commercial lease and obtain more favorable terms for your business.
