Many business owners are surprised by how complex and lengthy the commercial lease negotiation process proves to be. You should expect to request changes to your lease and to have a back and forth with your landlord before you finally sign the contract. Following these steps will help to ensure that the process goes smoothly and leads to a fair outcome for your company.
1. Find an Expert to Have at Your Side
A tenant representative is a must-have for a lease negotiation. The rep will act as your advocate, making sure that your interests are protected. You can count on the tenant rep to provide you with advice and to explain terms that may be confusing. In addition, tenant rep brokers can also help you find the best office or buildings for your needs at the start of the process. Since landlords cover the rep's fees, hiring one won't increase the cost of your search.
2. Do Some Market Research
Data is a valuable asset at the negotiating table. Knowing what the current market trends are will give you grounds to argue for lower rental rates and concessions that are important to your company. Plus, you'll walk in with a better idea of what the overall market is like. If there are many vacancies in similar buildings in your area, the landlord is more likely to be flexible to secure a new tenant than he or she would be in an area where space is in high demand.
3. Have a Clear Vision of Your Needs
You can't negotiate successfully if you don't have a clear picture of what your company requires. Before you head to the negotiating table, consult your management team and compile a list of what changes you wish to see in the lease. Prioritize those items into "deal breaker", "strong need" and "would be nice to have" categories, so you know where you can compromise and where you need to stand firm with your prospective landlords.
4. Consider Long-Term With Flexibility
Opting for a long-term lease will give you much more leverage with your landlord than you'll be afforded with a shorter term. Still, you need to take some steps to keep some flexibility in your lease to future-proof your business. Subletting and assignment clauses can help you put unused space to use or turn your lease over to another tenant in the future. You may also want to add a right to early termination clause or a renegotiation clause to the contract.
5. Be Willing to Walk if Necessary
Even if you have your heart set on a specific office, you should always be willing to walk away from the table if necessary. Giving up too much in order to get that prime space of your dreams is likely to lead to costly problems and hassles in the future. Always keep one or two doors open elsewhere up until you sign the lease, so you don't have to go back to square one if the deal falls through.
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