While negotiation involves making compromises, it’s essential to ensure that your commercial lease isn’t entirely in the landlord’s favor. To help you get the best deal when leasing commercial real estate, follow these 10 tips:
1. Have an Expert by Your Side
A tenant rep broker can protect your interests during negotiations. These brokers are experts in commercial real estate and know about the commercial lease. They can advise you when you have a fair deal. Best of all, the landlord typically pays the broker’s fees, so their services come at no cost to you.
2. Think Beyond the Initial Contract
When presented with an initial contract, landlords may claim it’s standard and suggest no negotiation is necessary. Don’t be fooled by this tactic. The first version of the contract favors the landlord. Consider it a starting point for negotiations.
3. Calculate All Costs for Commercial Lease
Never focus solely on the rent. You must also factor in Common Area Maintenance (CAM) fees and other potential costs. Make sure your total monthly payment aligns with your budget and is fair.
4. Start Early
Begin your search for commercial office space as early as possible. Having time on your side gives you an advantage. When you’re not rushed, the landlord can’t exploit a sense of urgency. Plus, you’ll have time to explore other options if you can’t reach a favorable agreement.
5. Review the Entire Contract
Read every line of the contract carefully. Ensure you understand all terms and ask for clarification on anything that seems confusing before signing.
6. Prioritize Your Requests
Make a list of the amendments and concessions you want before negotiating. Rank them by importance. Decide which are deal-breakers and which you can compromise on. This will help you stay focused during the negotiation process.
7. Know the Market
Research the local market to understand what other tenants are paying and what contract terms are genuinely standard. If you don’t use a broker, ensure you’re well-informed to back up your requests.
8. Involve Your Team
Before signing the contract, have your management, finance, legal, and operations teams review it. Fresh perspectives may uncover details you missed.
9. Fight for Flexibility
Negotiate for flexibility in your lease. For example, include subletting clauses or the ability to renegotiate or end the lease early. This can save you from future headaches if your business needs change.
10. Be Prepared to Walk Away
The most important tip is to be willing to walk away. If the landlord isn’t willing to meet you halfway on key concessions, it’s better to explore other options. You’ll find a fairer deal that fits your business needs elsewhere.
Even after outlining all the information above, deciding whether to go for a 1031 Exchange or a Cash Refinancing can still seem daunting. That’s why the LeveragedCRE Investment Team at Commercial Properties, Inc. is here to help you achieve your business and investment goals. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
Need assistance with your 1031 Exchange or DST? We’ve got you covered!
We’ve prepared a comprehensive, free e-book designed to guide you in achieving your long-term business goals or acquiring that dream property you’ve been eyeing.
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.
Stay informed with the latest in Commercial Real Estate strategies designed to enhance your income property investment results by bookmarking www.leveragedcre.com.