7 Tips to Negotiate a Commercial Lease

You’ve found it — the perfect location for your business! This space checks all the boxes for what your business needs, and to say you’re eager to move in would be the understatement of the century.

But before you get the keys to your new workspace, you need to sign the commercial lease —and before that happens, you must negotiate with the property owner. For those unfamiliar with the process, understanding the difference between a fair negotiation and one that unfairly benefits the property owner may not be as clear. Learn how you can settle on a fair commercial lease agreement and ensure a fair deal for both parties.

1. Know what you want.

What does the ideal location look like to you? What are your must-haves? Before you negotiate your commercial lease, you must know exactly what you want. This includes the length of the lease, the price, the location, and any amenities important to your business.

2. Do your research.

Do your research ahead of time. Understand the market rates for the type of space you are interested in. This will give you a good starting point and help you negotiate a fair deal.

3. Have a negotiation strategy.

Have a clear idea of what your goals are and what you are willing to concede. Without a plan, you may find it more difficult to stay focused and keep the other party from taking advantage of you.

4. Understand the types of commercial leases.

Understand which commercial lease is right for your business.

Gross Leases: In most cases, tenants tend to prefer this kind of lease because the tenant is only responsible for the rental value of the property. With this kind of lease, the landlord pays the property insurance, taxes, maintenance costs, and at least some of the utilities.

Net Leases: This is a type of lease where the tenant pays a portion or all of the property taxes, insurance fees, and maintenance costs for a property, in addition to base rent. This type of lease is more favorable to the Landlord.

5. Understand the industry standard.

Before negotiating, know exactly what you need in a commercial space. This will help you determine what’s negotiable and what’s not. Do your research and understand the standard terms for commercial leases in your industry. This will give you abetter idea of what's reasonable to ask for.

6. Get help from a professional.

Whether you’re a first-time lessee or have been through the commercial lease process, having a professional on your side is always a good idea. A professional leasing agent can help you understand the lease contract, identify any potential red flags, and negotiate on your behalf to get the best possible terms for your business.

7. Be prepared to walk away.

Unfortunately, even if a particular property checks all your boxes, sometimes it’s just not meant to be. When negotiating a commercial lease, be prepared to walk away from the deal. This doesn’t mean you should be rude or aggressive, but you should know your bottom line and be willing to walk away if the landlord isn’t willing to meet your needs.

Ready to partner with the commercial real estate experts? Our dedicated team of brokers is standing by and ready to help you. Contact us today or call 309-691-5919 and see how we can put our knowledge to work for you.

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