Getting the Best Deal in Your Commercial Lease
While the art of negotiation means making compromises, you want to ensure that you walk away with a commercial lease that isn't all in your landlord's favor. To ensure that you're getting the best deal when leasing commercial real estate, follow these 10 tips:
- Have an expert by your side
A tenant rep broker can help to ensure that your interests are protected at the negotiating table. As experts in commercial real estate, brokers know the market and can help you decide when you have a fair deal. Best of all, the landlord pays a broker's fees, so their services won't cost you a thing.
- Think past the contract
When you're presented with an initial contract, the landlord may tell you that it's standard and act as if every other tenant simply signs without any discussion. Don't be fooled by this practice. The first version of the contract will be written only with the landlord's interest in mind. Think of it as a starting point or springboard for a negotiation.
- Calculate all of the costs
Never make the mistake of only calculating the cost of the rent. You'll also need to add in the Common Area Maintenance or CAM and any other fees that are being assessed to ensure that your monthly payment fits your budget and is fair.
- Start as early as possible
Waiting too long to start looking for commercial office space can make it harder to negotiate a fair contract. However, when you have time on your side, the landlord won't be able to take advantage of your sense of urgency, and you'll have time to start your search anew if you can't reach a fair agreement.
- Comb over the entire contract
Read over every line of the contract and make sure you understand all of the terms. Then, seek clarification on any confusing points before you sign.
- Prioritize your wants
Make a list of all of the amendments and concessions you want to add to the contract before you get back to the landlord. Then, prioritize them, deciding which ones are deal-breakers and which ones you can live without, so you'll be able to compromise during the negotiation.
- Know the market going in
Having a working knowledge of what other tenants in the area are paying and what types of contracts genuinely are the standard will have you armed and ready to prove that your requests are reasonable. If you don't follow tip number one, make sure you do plenty of research before negotiating.
- Include your team
Before you sign the contract, have members of your management, finance, legal, and operations team review it and provide feedback. You never know what fresh sets of eyes may find in the text.
- Fight for flexibility
Whenever possible, try to provide some way to keep your lease flexible if your needs change—for example, subletting clauses, or the right to renegotiate or end your lease early can save you from hassles in the future.
- Be willing to leave the table
Most importantly, be willing to walk away if your landlord won't meet you halfway and give you the concessions at the top of your list. You'll be better off going for your second choice property for a fairer deal than you will be settling for terms that aren't the right fit for your business.
If you have any questions on this article or need commercial space, contact us anytime, we're happy to help. Contact us at (480) 330-8897 or send us an email at email@example.com.
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Phill Tomlinson is a commercial real estate broker with Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, and owner of the Leveraged CRE Investment Team specializing in investment sales and tenant/landlord representation in the Phoenix and Scottsdale submarkets. Phill applies over 21 years of experience in the Real Estate industry helping investors and owners maximize their returns.
Bookmark www.leveragedcre.com to learn more about the Commercial Real Estate market and keep informed of relevant real estate strategies designed to maximize your income property investment results. Connect and follow Phill on Social Media at sm.leveragedcre.com/smplatform. #LeveragedCRE