Understanding and Negotiating Commercial Real Estate Leases
Commercial leases are complicated and are very different from residential leases. Before signing any commercial lease you need to know what questions to ask, and how rent, load fees, and other added fees are calculated. Armed with knowledge you can negotiate the best deal possible!
Women are just as capable of negotiating a good deal in commercial leases as men are, but negotiating starts with asking the right questions.
Once you have answers to certain questions, you can research more about types of leases, leasing terms, negotiating commercial leases. You will also be better able to plan your finances, and your negotiation strategies if you know what questions to ask.
- Question #1: What Type of Commercial Lease is Being Offered? The type of lease being offered is probably the most important thing to consider first because it determines how you will be charged rent. The terms of commercial real estate leases are defined by the type of commercial lease.
- Question #2: Are the Terms of the Lease Negotiable? All commercial leases should always have at least some room for negotiation, no matter how small. A completely inflexible landlord is generally not someone you want to lease from because “inflexible” often equates with “unreasonable.”
- Question #3: What Insurance Coverage Does the Lease Require Tenants to Purchase? Few business owners new to commercial leasing will look beyond their actual monthly rent and utility costs when determining if a space is affordable, but you also need to consider your insurance costs.
Moving from a home-based business into “brick and mortar” space will cost you more to insure your business because in addition to your own insurance needs, your landlord will probably require you to purchase insurance to protect him/her as well.
More Questions and Considerations Before Signing a Commercial Property Lease
- Industrial Space Leases - Before You Sign, Look at More than Numbers
- Questions to Ask About Industrial Space Lease Terms, Rent and Other Fees
- Questions to Ask About Build-Outs and Renovations of Industrial Spaces
- Questions to Ask About Business Use Restrictions When Leasing Industrial Space
Terms You Need to Know to Understand Commercial Real Estate Leases
When you rent commercial space, you will often be paying for more than the actual square footage you will be occupying. A landlord can easily take advantage of someone who does not understand the difference between a Triple Net Lease (NNN Lease) and Double Net Lease. While the difference may not sound like much, and NNN lease is the worst kind of lease for any tenant to sign as it almost always favors the landlord.
Here are articles that will not only explain the different types of leases, but that also explain how rent and added costs, like Common Area Maintenance (CAM) fees are calculated:
- Square Footage Formulas Used in Calculating Commercial Lease Rents: Why The Space You Occupy is Not All That You Pay For
- Common Area Maintenance (CAM) Fees in Commercial Leasing: 101
- Commercial Leases - Square Footage Used in Calculating Commercial Leases
- Average Percentage Rents Charged in Commercial Leases
