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3 Tips for Negotiating a Commercial Lease

Posted on: August 20, 2018

As a potential tenant, negotiating most commercial real estate leases is always worthwhile rather than accepting the initial terms that are given.

Considering the fact that the lease is one of the top expenses for any business, the effort spent on negotiating more favorable terms or lower costs will go a long way.

Below are some tips for negotiating your next lease, which is often easier with the assistance of a Florida commercial real estate lawyer:

Tip #1 – Look at comparable rents

It may seem obvious, but it’s essential to look at rents for comparable spaces in whichever city you are considering. This will help you find the best deal possible.

You will also want to consider your other costs, such as your share of insurance, maintenance and property taxes if it is a single, double or triple net lease.

Your attorney can help you identify exactly what costs you will be liable for and help you determine whether it is a favorable deal or not.

Tip #2 – Consider the length of the lease

Every business will have very different goals when it comes to their preferred lease term and the potential changes to their space that may occur in the next 1-3 years.

It’s essential to have a long-term plan in place prior to lease negotiations so that the most ideal term and flexibility options can be decided.

Established businesses may prefer a longer lease term which can typically result in lower negotiated costs, while startups or high growth companies may desire more flexibility and thus a shorter term.

Tip #3 – Determine the ideal lease structure

Lease structures can vary widely in commercial real estate due to the vast variety of different business circumstances that are encountered. Deciding between a single, double, triple, gross or percentage lease can be tricky, with many potential benefits and disadvantages to each option.

With triple net leases, the costs for maintenance, taxes and insurance are passed through to the tenant. Although this type of lease can be common in certain industries, tenant negotiations are still advisable. Potential monthly costs can be capped for tenant among other cost protections.

A double or single net lease passes on fewer of these costs but may have a higher monthly rent, while a gross lease passes none of these costs onto the tenant but rather includes them in the rent.

The wide range of scenarios that can be encountered during lease negotiations often necessitates a meeting with a commercial real estate lawyer in Florida. If you are currently negotiating a lease, contact Schecter Law today at (954) 779-7009.