How To Negotiate A Commercial Lease

Negotiating a commercial lease takes a lot more work than negotiating a lease for a residential property. There are many clauses, escalators and other fine print that you have to comb through to ensure that you are getting the best possible deal. What tactics should you use in the negotiating process to ensure that you are getting a good deal?

 

 

 

Get A Competent Commercial Lease Broker

When you are looking to rent commercial office space, you should always negotiate with the assistance of a commercial real estate broker. This person will help you find a good location as well as help you determine how much you an afford to pay in rent. Scheduling an appointment at your broker’s office can be beneficial. If you don’t want or cannot afford a typical office space, you can see MORE office types here or visit MalaysianToday.com.

 

How Much Can You Afford To Pay In Rent?

The rule of thumb is that you don’t pay more than 10 percent of your gross sales in rent. If you are making $100,000 in sales per month, you can afford to pay up to $10,000 a month in rent. Business owners looking to rent commercial property should know that rent is often calculated per square foot and presented as an annual figure. This means that your landlord will most likely tell you that the rent is $50 a square foot per month and costs $50,000 a year to rent.

 

Protect Your Investment

Many business owners rent space in an area that they think will draw the most traffic. Typically, you want to set up in an area that is already being used by a big company. For example, a business may want to set up shop in an area that has a large grocery store or other retailer in the area. However, if that retailer leaves, your foot traffic could decline as well. For that reason, make sure that you have a clause in your lease that lowers your monthly rent or allows you to leave the location before the end of your lease.

 

Don’t Become Emotionally Attached To A Property

Your broker and your potential landlord will spend weeks negotiating the terms of your lease. Therefore, you should stay calm and collected throughout the negotiating process. If you seem too eager, your landlord won’t be willing to give you a deal that is more to your liking.

 

Hire Legal Representation

The final step in the process is to hire an attorney who will review the lease before it is officially signed. Your lawyer will go over the entire document to ensure that it is worded exactly how you want it to be. If your legal counsel raises concerns about the deal, make sure that you listen carefully.

Negotiating a commercial lease takes a lot of time and effort. With so much money riding on your lease, make sure that you cover ever detail before signing it. A bad lease could doom your business to failure.