Your Guide to Negotiating a Commercial Lease Agreement

Are you wondering how to lease a commercial retail space? Alternatively, perhaps you want to know how to negotiate a commercial lease renewal. Regardless, we at Zinati Realty know what it takes to manage commercial operations with care and precision. With that being said, let’s explore how to negotiate a commercial lease agreement.

Factors to Consider

Before deciding on a specific commercial lease for retail space or otherwise, get to know the environment in question. What sort of shape is the building in? Is it properly maintained, clean, and located in an area that will get sufficient foot traffic? There is also the question of space, onsite amenities, parking for employees and visitors, and how extensive the interior renovations will need to be. In addition, what about availability? Will the property be ready for when you need it?

If leasing a specific property feels like too much work for too little gain, it might be more feasible to consider alternative solutions. Our team knows the commercial real estate market well and can aid you significantly in this regard. We have a list of commercial properties for lease that are ideal for many use cases and capacity requirements.

How to Obtain a Commercial Lease

In addition to establishing your needs as covered above, it’s a good idea to seek out legal counsel. An experienced lawyer can provide a knowledgeable opinion on the terms and conditions in the binding offer. You should also secure appropriate financing if required, as well as eliminate as much guesswork as possible in the way of specific terms and conditions you must adhere to as the tenant. Let’s explore that in more detail next.

Understanding Your Lease Options, Terms, and Conditions

Commercial leases are typically set for durations of five or ten years, sometimes less, which is something you should bear in mind prior to signing anything in case you’re planning to expand or expect rapid growth. A binding offer will usually be produced, which is what will contain the essential terms and conditions related to the lease. For example, in the context of a retail lease, it’s possible that you’ll need to pay a certain percentage of sales. This is commonly known as a percentage rent lease.

Other possible options include net leases that charge you for rent in addition to anyone or a combination of property taxes, utilities, and insurance. For example, a double net lease would consist of two of these, and a triple net lease would require you to cover all three. Or, you may have a gross rent lease, which covers a wide range of services in addition to the rent under a single recurring payment.

We recommend that you examine the binding offer carefully to ensure you agree and are comfortable with the established terms and conditions. This should always include the termination conditions, just in case the arrangement doesn’t work out. If these details are daunting or too much to process on your own, it’s understandable, especially for a first-time business owner. However, consulting with an experienced commercial sales and leasing firm can help you make a well-informed decision. 

Making Use of the Negotiations Process

Most leases are designed to give wiggle room for negotiating specific terms and conditions, which is why you shouldn’t sign right away. The landlord should be willing to provide tenant inducements (these can potentially include rent-free months or discounted leasehold improvements). The landlord wants to fill the unit with a stable, reliable tenant who always pays on time, so this arrangement should be treated as a two-way street.

Want to learn more about how our sales and leasing experts can help you negotiate a lease for a commercial retail space? We’re happy to assist here at Zinati Realty. Contact us today.

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