Negotiating w/ Commercial Landlords (For Your Business)
By thoroughly understanding the different commercial leases, you can position your company on a path to success. These lengthy legal agreements are binding contracts between a lessor (the commercial landlord) and a lessee (the commercial tenant). The contracts allow the lessee to have business use of office space, retail property, a warehouse, industrial real estate, and other commercial property.
For expert legal advice and assistance, involve an experienced commercial real estate lawyer in your business lease negotiations. You can gain expert guidance and assistance from the highly respected San Francisco business attorney, James Braden.
Essential Elements of Commercial Leases
A commercial lease is required to include the following basic elements of a contract:
- Offer – A statement of agreement to enter into a contract;
- Acceptance – A clear, unambiguous lessee statement of agreement to the offer;
- Consideration – The lessor’s asking price in exchange for the lessee’s promise;
- Intent – The single intention of creating a legal contract; and
- Signatures – The signatures of both the lessor and the lessee will make this lease a binding agreement.
Different Types of Commercial Leases
Knowing how to negotiate a lease requires complete knowledge of business leases. You can be well prepared for negotiations by consulting the San Francisco business attorney. The five different types of commercial leases currently available to business owners are the following:
A net lease contract usually stipulates that the commercial tenant will pay the base rent plus one of three additional fees: property taxes, insurance, or utilities. Under most net leases, the tenant agrees to pay the base rent plus property taxes. The landlord then pays maintenance, repairs, and additional incidental costs.
Double Net Lease
Under a double net lease agreement, the tenant agrees to pay base rent, a percentage of the property taxes, utility costs, regular cleaning services, and insurance premiums. The landlord agrees to pay for any structural repairs to the property and maintenance.
Triple Net Lease
In this lease contract, the tenant agrees to pay all operating expenses relative to the rental property, except for structural repairs. The tenant pays property taxes, maintenance, utility costs, and insurance premiums. Landlords frequently favor triple net leases since the tenant pays all operational expenses for the property under these agreements.
In this type of lease, the tenant agrees to pay the base rent plus a percentage of their sales revenues that exceed a specified minimum amount. This contract permits the tenant to pay a smaller base rent provided they share their profits with the landlord.
Gross Rent Lease
Under this contract, any costs related to the rental property are divided equally between the tenant and the landlord. The tenant agrees to pay a specified amount that covers rent, taxes, structural repairs, and all other rent-related incidentals to the landlord.
Negotiating with Commercial Landlords for Your Business
Here are things you need to know and do in negotiating with commercial landlords:
- Learn about the commercial property market in your locale. Perform due diligence to acquire full knowledge of the costs of comparable real estate in your area. It can help you negotiate a fair rental fee.
Contact other businesses in your area to obtain information about neighborhood issues, such as security. These facts can be good negotiating factors for obtaining reasonable rent.
- Consider a long-term lease. Business tenants who will agree to a long-term lease have increased negotiating power. With a long-term lease, the landlord often agrees to allow concessions and lower costs for the tenant. Seek legal assistance concerning how to negotiate a lease.
- Know the conditions for termination. Ensure that you fully understand the situations and conditions that allow the landlord to terminate the lease. These conditions are typically spelled out in a termination clause. Your attorney can provide you with a full explanation of termination conditions when you learn how to negotiate a lease.
- Request favorable clauses. Request clauses in the lease that will benefit your business. Perhaps you want to have the right to sublease your commercial space. You may also desire to negotiate terms for renovations before your company occupies your new facilities.
- When negotiating a commercial lease, it is imperative to involve an attorney or a tenant rep broker. Real estate attorneys like James Braden have a thorough understanding of business leases. They can greatly help you acquire favorable lease terms and save money for you in the long term.
James Braden is a respected San Francisco business lawyer who can assist you in negotiating commercial lease agreements. This highly respected law firm provides full advice and services about real estate law, including commercial lease negotiations and contracts. Contact us today to set up an appointment.