What is a Commercial Rent Negotiation?
Commercial rent is a commonly negotiated term in leases, as tenants want to have more affordable monthly expenses when renting a property for their business.
If you wish to amend the terms of your commercial rent requirements, you do have the option. With the right strategies, you’ll increase the chance of acquiring better terms.
Read the rest of this article to explore how to negotiate commercial rent, what strategies to consider, and when to consult with a professional, experienced lawyer for support.
What are Tips for Negotiating Commercial Rent?
To ensure you can effectively discuss the terms of your commercial rent, you should consider the following tips.
Understand the Different Types of Leases
It’s important to know what leases are available. These include the following:
- Gross lease. Under this agreement, the landlord pays for expenses linked to owning the property, such as insurance, utilities, and repairs.
- Net lease. This is when the tenant is responsible for covering expenses such as insurance, utilities, and repairs.
- Modified lease. This is a more flexible type of agreement as it contains both gross and net lease elements.
Conduct Research
You should do your own research before negotiating with your landlord. Calculate the average cost of commercial properties for rent in your location. This can help you to see if your commercial rent amount is fair and reasonable.
Consider a Longer Commercial Lease
It’s common for landlords to want tenants to stay in the property on a long-term basis. By suggesting a longer term, you could gain leverage to negotiate for a lower rental rate.
Consider Other Costs
While your rental amount might be what you’re negotiating, you want to clarify other costs that could be your responsibility, such as operating expenses. Check that they’ll fit in your budget. If you can’t lower the commercial rent price, you could suggest that these additional costs are lowered.
There are other costs you might not think about when signing a commercial lease but which could help you lower your expenses over time. These include:
- Access to amenities. This includes parking or Wi-Fi on the premises. You could ask if they’re free to use.
- Exclusivity. If you’re going to pay a higher rental amount, the deal could feel more appealing if you can have an exclusive use contract. This prevents the landlord from being able to rent to a competitive business.
- Rent-free fixturization. Since you'll need time to set up your business or office space, you should ask your landlord if you can get some time to do this before having to pay rent.
Negotiate for Less Risk
Sometimes, negotiating certain aspects of the commercial lease can help you to have better terms that prevent financial losses in the future. A prime example is to ask the lender about penalties for violating the lease. If the consequence is that you will have to pay the full amount owing on the lease, it’s worth limiting your liability by reducing the penalties.
Ask About Repairs
It’s common for landlords to expect their tenants to pay for HVAC systems and other repairs. To prevent spending lots of money on this maintenance and repairs, you should ask for an inspection of everything that is your responsibility on site before signing the lease.
You could also try to negotiate that the landlord shares certain maintenance or repair costs, or caps your expenses so that they’re more reasonable.
Get a Legal Review of Your Commercial Lease
It’s important to review all terms of your commercial lease before you negotiate a lower rental rate. This will help you think beyond the rate for any benefits you can achieve. However, it’s worth getting a legal review of your commercial lease from a professional lawyer. They’ll identify risks and other red flags that you might miss without a strong legal background.
You can request a legal review of your commercial lease on ContractsCounsel, one of the largest online legal marketplaces where clients hire vetted lawyers on the platform. Simply request a project for free by posting it on the ContractsCounsel marketplace.
Specify any details related to the job, and wait for lawyer bids on the project. You can review the lawyers’ profiles according to data such as their experience, expertise, and other factors, so you choose the best one for your project.
Showcase Your Tenant Benefits
Landlords are eager to sign leases with tenants who have a good financial history, a strong brand, and are looking for a long-term lease. If you can tick all these boxes, your landlord will be more likely to concede and negotiate terms with you to reduce your rent. To help you sway them in your favor on specific terms you want, you could remind them of these benefits.
Include a Break Clause
A break clause is the chance to terminate the lease by having an agreed-on notice period, such as a specific number of days. This is beneficial financially because it means that if you can’t maintain the lease, you won’t be locked into it.
How Can a Lawyer Help You with a Commercial Rent Negotiation?
A lawyer can assist you in various ways during commercial rent negotiation. This includes offering the following services.
- A lawyer will conduct a thorough review of your commercial lease so that they can check for any unclear, complex, or unfair terms.
- They’ll conduct market research to see if your rental amount is fair.
- They’ll negotiate with the other party to ensure you can achieve a better deal.
- They’ll assess what benefits you can negotiate, besides a lower rental rate, to ensure favorable terms during your lease.
- They’ll reduce your risks by adding protections into the contract.
- They’ll reduce additional charges, such as those for maintenance on the property.
- They’ll ensure that the lease is legally sound and aligned with all commercial property regulations.
Where Can You Find a Lawyer for Help with a Commercial Rent Negotiation?
If you need a lawyer, hire one from ContractsCounsel. All lawyers on the platform are vetted, with years of experience in helping clients negotiate better deals for their commercial rent. By working with a professional, they’ll help you to gain insight into all aspects of the commercial lease and prioritize your interests during negotiations.
