Negotiating commercial leases: Reduce your square footage
Friday, January 25, 2019
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 his own business, savvy real estate agents and brokers are specialized sales people. 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 commercial tenant as the amount of rent he or she pays will directly affect the entrepreneur’s financial bottom line.
Whether you are leasing a new for the first time or negotiating a lease renewal for your business, here are some tips:
Reduce your square footage
Many entrepreneurs who hire The Lease Coach to negotiate a rent reduction for them are suffering from leasing too many square feet. For some tenants, a reduction in their leased area now or renewal time will solve their problem.
Alternatively, moving at renewal time can also help. With a proper commercial space plan, some tenants could reduce their area by 10 to 30 percent with minimal inconvenience. This reduction in gross rent could justify the process.
Take your fixtures with you
There’s a saying in this industry, if it’s glued, screwed or nailed down, you can’t take it with you. Many entrepreneurs are shocked to discover that their leasehold improvements — for example, expensive counters, light fixtures, and even certain types of signage — must be left behind.
There’s usually a financial benefit to removing your fixtures. Also, consider that your competition may move into the premises and benefit by using everything that you left behind.
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