Negotiating commercial leases: Request written proposals
Wednesday, November 28, 2018
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:
Request written proposals
When negotiating a new lease or renewal, it is most desirable that the landlord or property manager’s proposal be in writing. Getting the proposal in writing allows you to ensure you understand what may have been discussed verbally and provides a platform for you to counter offer from.
A landlord may not automatically send you a renewal proposal at the end of your term. If your calls go unanswered, mail or e-mail the landlord a letter requesting a renewal proposal within 10 days.
Without looking like you automatically want to renew your lease, you do want to know what deal the landlord expects to do well in advance. Always ask for written proposals versus verbal ones.
Offseason rent relief
Does your business experience a slow period of offseason at the same time each year? If so, you should try to negotiate some rent relief for those months.
Naturally, it is best to make these arrangements in advance of renewing the lease agreement. Being open is often the best way to approach this situation.
It’s a straightforward problem that can be easily solved by reducing the rent during a certain month(s) … even if it means you are paying slightly higher rent during other times of the year.
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