5 Tips When Negotiating Your Commercial Lease

In this article, you'll learn:

• Why knowing local market rates and zoning laws gives you leverage.
• How a longer lease term can help reduce your rental costs.
• The impact of load factors on your rent and why they matter.
• How a tenant rep broker can secure the best deal and save you time.

Commercial leases can be negotiated, for the landlord may not be fully aware of your business needs. Therefore, it is advisable that you understand the lease document and negotiate for a more favorable commercial lease. In this article, we are going to cover the five tips you should know when negotiating your commercial lease.

1. Know the Going Rates for the Area

Knowledge, as it is said, is power. To have leverage when negotiating with the landlord, it is essential that you know what other companies are paying for similar buildings and properties in your area. This will help you to know if the quoted fee is in line with the current market rate.

In addition, ensure that you check the zoning laws for the area. Certain zoning laws may inhibit parts of your business process. Hence, ensure that you are negotiating a building in the right area.

2. Put It In Writing

By having the details of your negotiation in writing, you are able to avoid any misunderstandings. In addition, when the landlord is well aware of what you want, they can easily respond to your requests.

3. Understand the Power of Term Length

Landlords don’t want to negotiate every year. Hence, if you can offer a longer-term on your lease, they are likelier to agree to lower costs.

It is essential that you first evaluate your office space needs, so you can decide if a longer lease term is good for you. Once you have decided to go for a long lease length, you will find that landlords are more eager to listen to your offer.

4. Do the Math

There is math behind your rent rate, and you should be interested in knowing it. Your rental rate will be calculated not just on the amount of square footage that you'll be occupying but also on a portion of the square footage that you share with other tenants. Load factor is the term used by landlords in determining the amount of rentable square footage used to calculate your rent.

You can check with your landlord to know how the Load Factor is determined and double-check the rate to ensure that you have been quoted accurately.

5. Use a Tenant Rep Broker to Get the Best Deal 

Hiring a dedicated and exclusive tenant rep broker helps your company get the best obtainable office space at a good price. To hire a tenant broker, it is essential to get rid of the common misconception about tenant brokers: the belief that they are an unnecessary expense when searching for an office space. This is because tenant brokers’ fee is not added to your office space search expenses. Instead, their fees are paid for by the landlord. Having a tenant broker by your side can be very invaluable in many ways:

Tenant Rep Brokers Have Connections

There are hidden and exclusive spaces that you may not know if you don’t enlist the service of a tenant rep broker.

Your Time is Precious

As a business owner, you should be spending more time on your business. Hence, a tenant rep broker can help you with the lengthy and boring negotiation process.

Commercial Leases are Complex

Even though your attorney will review your commercial lease, it is still essential that you understand the terms you are agreeing to. Tenant rep brokers can help you simplify the complex clauses due to their long experience working with business owners.

Here are a few other articles we think you'll enjoy:

You Need a Tenant Rep Broker: Here's Why

10 Commercial Lease Clauses You Should Know

What to Know About Your OPEX (Operating Expenses)

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