Business owners thinking about leasing property may wish to negotiate the lease’s terms and conditions before finalizing the deal. That’s because most landlords are willing to work with business owners. After all, they do not want a vacancy in their shopping center, office building, or other property.
Can a business owner negotiate a property lease?
Many business owners are surprised to learn that they can negotiate certain terms of a lease. Business owners should keep this in mind when discussing terms with their potential landlord.
Lease provisions that could be negotiated
The commercial lease will contain several important lease provisions, and every business owner should carefully examine the lease before signing, preferably with the help of an attorney who specializes in business and real estate law. Below are only a few of the common provisions that business owners should familiarize themselves with before signing and may wish to negotiate before the beginning of the lease.
- Tenant exclusive. This term of the lease limits the use of a tenant’s business. As an example, if you own a hair salon and you intend to sell hair care products you may be limited if another tenant in the shopping center – perhaps a beauty supply store – has negotiated a clause to limit competition.
- Cost of rent. In addition to negotiating the cost per square foot, owners may also negotiate the cost of other rent-related expenses, such as electricity, water, and garbage disposal.
- Maintenance and repair clauses. This could include anything from snow removal to landscaping and repaving.
- Relocation right. This provision allows the landlord the ability to move a tenant’s business to another space if certain conditions exist. This can be devastating to the business because the ability to be seen is a premium factor in commercial leasing.
- Term of lease. Commercial lease terms typically run anywhere from 5 to 20 years. Before deciding on the term length, business owners should consider various elements including whether this is his or her first venture, whether the business is a franchise, and other factors.
- Hidden fees. Fees are often tucked away in the lease and often leave business owners paying monthly on expenses that could have been cut had the negotiation taken place at the beginning of the process.
Help is available
Commercial lease negotiation is best accomplished with the help of an attorney. The business and real estate attorneys at O’Reilly Rancilio represent both landlords and tenants with lease negotiation and more. For more information, please call 586-726-1000 or visit our website.
