Negotiating commercial leases: Location, location, location
Wednesday, May 31, 2017
For many commercial tenants, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing, savvy real estate agents and brokers are specialized salespeople. Their job is to sell tenants on leasing their location at the highest possible rental rate.
Tenants may go through the leasing process only two or three times in their entire lifetime — yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for a business owner as the amount of rent he pays will directly affect the company's financial bottom line.
Whether you are leasing a new location for the first time or negotiating a lease renewal for your business, here are three money-saving tips for commercial tenants:
1. Location, location, location
If you are a retail tenant, selecting the right property is critical enough, but leasing the right location within that building can be even more important to your success. Will you be leasing space next to a busy food court or on the typically-much-quieter second level of the property?
Most industrial and office-type businesses, however, do not rely as heavily on location to produce business. Proper site selection takes time and objective consideration. Remember, the most difficult part of any lease agreement to change after opening is the physical location.
2. Negotiate for early occupancy
If your commencement date is June 1 but you are ready to open your new business on May 19, the landlord usually doesn't mind. However, the landlord may expect to get paid rent for the early occupancy period.
By negotiating for rent-free early occupancy, you can save or make money — depending on how you look at it. Whether it's just a few days or several weeks, you win.
3. Talk to other tenants
Some of the best inside information about a building is from tenants already leasing in that building.
When you are looking for a commercial property for your new company or growing your business, introduce yourself to current tenants as a prospective tenant and ask for their honest opinion of the landlord, the level of property maintenance, their rental rate, their intentions to stay on another lease term, and so on.
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