Negotiating a Commercial Lease
Whether you are a new business owner or have been in business several years, a commercial lease is most likely going to be your largest expense. It is well worth your while to work on negotiating a commercial lease. It is highly recommended to have an attorney review the lease, not only to help you bring down future costs, but more importantly, to try to limit your liability which can be severe in certain situations.
There is a lot of leg work you can do before hiring a lawyer to save you both time and money.
1) Pricing
2) CAM & Taxes
a. CAM: this is “common area expenses.” Depending on the lease terms and the property this can be minimal or extensive. Sometimes it’s a flat rate and sometimes it’s a per square foot charge. This often includes items such as landscaping, snow removal, sidewalks, landscape sprinklers, parking lot maintenance, vestibules and the like.
b. Some landlords pass the real estate tax fees to their tenants directly. The tenant will have no control over these fees and they can be extensive.
3) Terms & Renewal
4) Renewal Notices.
5) Personal Guarantee
6) Partners
7) Tenants
8) Measure
9) Escalation
Signing a commercial lease is a big deal and you do need an attorney to help protect you. It’s not like a personal lease. Businesses are not afforded the same protections from a bad landlord. Do your home work. Research rents, look at the details, ask other tenants about the landlord, check on the landlord, you can call the village or chamber and see if they have an opinion on them. Each lease negotiation is very unique. I’ve never seen two that were the same, but the themes run through all. Check them out and protect yourself as much as possible. Some landlords will work with you while other won’t. Above all, if it’s not right don’t be afraid to walk away and move on.
The commercial lease is going to be one if not the biggest expense sand liability for your business. Take your time, don’t rush in and hire an attorney. A good attorney can save you more in rent and liabilities than what they are charging you in fees.