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HENRY B. LaTORRACA

Civil Trial Attorney

Tips for negotiating commercial leases

| Oct 16, 2018 | Commercial Real Estate |

It isn’t uncommon for a business owner to have some leeway in negotiating the terms of a commercial real estate lease. However, how much leeway it will have depends on market conditions. For instance, if most buildings in California are occupied, the landlord will likely be less willing to make concessions. On the other hand, if a landlord has many vacancies, it may be easier to get favorable terms.

Some of the most important clauses in the lease include the rental rate and the term. Depending on the terms of the contract, a business owner may be on the hook for rent plus the cost of taxes and repairs. It may also be a good idea to negotiate a cap on rate increases in future years. If possible, tenants should negotiate a long-term lease as a landlord may be more willing to work with those who are staying for several years.

Other issues to consider when negotiating a commercial lease include usage rights and the right to sublet. Subletting or assigning a lease to another party can be ideal if a company fails or no longer needs the space that it currently occupies. Broad usage rights make it easier to make the most of a commercial space if a company’s needs change or another tenant rents an adjacent area.

Seeking the advice of an attorney prior to signing a commercial lease may be in a business owner’s best interest. This may help to ensure that a company negotiates terms that are in its favor. An attorney may also help to resolve issues such as title problems that could make a space unusable.

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