Negotiating a commercial lease often involves compromise. However, it’s important to ensure the agreement isn’t skewed entirely in favor of the landlord. Follow these 10 tips to secure the best deal when leasing commercial real estate:
1. Have an Expert by Your Side
A tenant rep broker can protect your interests during negotiations. They have in-depth knowledge of the market and can guide you toward a fair deal. Best of all, the landlord typically covers their fees, meaning you won’t have to pay for their services.
2. Think Beyond the Initial Contract
The first draft of the contract will always favor the landlord. While they might claim it’s a “standard” lease, don’t assume it’s non-negotiable. Treat it as a starting point for discussions, not the final word.
3. Calculate All Costs
Don’t just consider the rent. Include Common Area Maintenance (CAM) fees and any other costs when assessing if the total monthly payment fits your budget. This will help you determine if the offer is truly fair.
4. Start Early
Begin your search for office space well in advance. If you wait too long, you may feel pressured to accept a deal out of urgency. Having more time gives you leverage and allows you to walk away if the terms aren’t favorable.
5. Read the Contract Carefully
Review every detail of the contract. Ensure you understand each term and clarify anything that’s confusing. Never sign until you’re confident about every aspect.
6. Prioritize Your Needs
Create a list of amendments and concessions you want to include in the contract. Rank them in order of importance, so you know which are deal-breakers and which are negotiable. This will help you navigate the give-and-take of negotiations more effectively.
7. Know the Market
Understand what other tenants in the area are paying and what lease terms are genuinely standard. This knowledge will strengthen your position and show that your requests are reasonable.
8. Involve Your Team
Before signing, involve key members of your management, finance, legal, and operations teams in reviewing the contract. Fresh eyes may catch important details you missed.
9. Fight for Flexibility
Wherever possible, push for flexible terms. Consider subletting options, renegotiation rights, or early termination clauses. These can save you from future complications if your business needs change.
10. Be Ready to Walk Away
If the landlord refuses to meet you halfway on your key requests, don’t be afraid to walk away. You’re better off pursuing another property with more favorable terms than settling for an unsuitable deal.
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Meet The LeveragedCRE Investment Team
Phill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets.
The team leverages their extensive knowledge and expertise to help investors and property owners maximize their returns and navigate complex real estate transactions with confidence.
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