What does a commercial space lease agreement cost? If you own real estate and are considering renting the space to a business, you may ask this question. Let’s explore this question and review some general information about commercial space lease agreements and when they are used.
How Much Does a Commercial Space Lease Agreement Cost?
A commercial space lease agreement is a legal contract between a landlord who owns commercial real estate and a tenant who is a business owner and needs the commercial real estate to operate a business.
Unlike a residential lease agreement which allows a person to rent a home, commercial space leases are for businesses only. As a result, these lease agreements have fewer legal protections and negotiable terms and conditions and generally have longer terms than residential leases.
Commercial space leases are an important real estate contract, so they must be drafted correctly. The landlord typically provides leases to the tenant, and many landlords choose to hire a real estate attorney to draft this important agreement.
A lawyer with experience drafting commercial space leases will know which information must be included in the contract to make it legally enforceable and protect the interests of the property owner and renter.
Different states have laws regulating commercial leases, so your commercial space lease must follow all local and state laws and regulations.
Based on ContractsCounsel's marketplace data, the average cost of a commercial space lease agreement is $612.63.
What's Typically Included in a Commercial Space Lease Agreement
Commercial space leases are customizable and often negotiable. They will have varying terms depending on the space and the landlord and tenant's needs.
Even though terms can be modified, the following clauses are usually included in all commercial leases:
- Rent Cost: The rent amount is calculated based on the commercial property's square footage and the property's geographical location. Rent is typically paid monthly.
- Rent increases: Unlike a residential lease, it is common for a commercial space lease agreement to include an annual percentage-based rent increase.
- Security deposit: Security deposits are common for all types of lease agreements. This provides additional funds to the landlord if the tenant damages the property or breaks the lease.
- Duration of the lease: A commercial space lease is usually longer than a year. Commercial property owners want to ensure their property is rented and receive a sustainable source of income. Business owners can negotiate a shorter lease with a renewal option. Short-term leases result in a higher monthly rent.
- Additional expenses: The commercial space lease agreement needs to address which party is responsible for the cost of utilities, taxes, repairs, and property maintenance.
- Property description: The property description includes the property address and square footage and what additional areas the tenant has access to, like bathrooms, common areas, or parking.
- Use clause: A Use Clause is added to a commercial space lease agreement to define how a business owner can use the property for their business operations. This clause protects the landlord and their property from damage and liability.
- Exclusivity clause: If a commercial property is a complex with multiple units, the business owner will want to add an exclusivity clause or exclusivity agreement to the commercial space lease agreement. This prevents the landlord from renting a neighboring space to potential competitor businesses.
- Compliance with the Americans with Disabilities Act (ADA): All businesses in the United States that are open to the public and have more than 15 employees must comply with the ADA providing accessibility to people with disabilities. A commercial space lease will outline which party is responsible for updating the property to meet these standards.
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Examples of Commercial Space Lease Agreement Projects
Commercial Space Lease Agreement Drafting
A commercial space lease agreement is almost always drafted by the property owner who acts as the landlord. It is recommended that a landlord hires an attorney familiar with commercial real estate to draft this contract.
After an initial consultation between the lawyer and the landlord, which allows the landlord to express what kind of lease agreement they need, terms they must include, and other important provisions, the lawyer will draft a commercial lease to fit the landlord's specifications.
Commercial Space Lease Agreement Review
Commercial leases are often long-term leases, so when a business owner agrees to this contract, they are making a big decision that could dictate the success or failure of their business. Therefore, before a business owner signs a commercial lease agreement, they should have their own lawyer review the contract.
Contracts are typically drafted in favor of the drafter – in this case, the landlord. Suppose a tenant hires a lawyer to review the contract. In that case, their lawyer will ensure that the contract is well-written, fair, and protects their client’s interests.
Drafting a Commercial Space Lease Agreement Cost
Drafting a commercial lease agreement can be a long process, especially if negotiations require revisions to the contract. Therefore, a lawyer will charge their client for any time spent drafting the lease agreement or making changes.
According to ContractsCounsel's marketplace data, the average commercial space lease agreement drafting costs are $685.00 across all states.
Reviewing a Commercial Space Lease Agreement Cost
When a business owner and potential tenant hire a lawyer to review their lease agreement, they will be responsible for covering any legal fees. In addition, the lawyer will charge for their time and expertise in checking the document and any negotiations they may enter on behalf of their client.
ContractsCounsel's marketplace data shows the average commercial space lease agreement review costs to be $507.00 across all states.
How Do Lawyers Charge for a Commercial Space Lease Agreement?
Hourly Rates for a Commercial Space Lease Agreement
Hourly rate fee agreements are common for lawyers in all industries to bill their clients. Under this arrangement, the lawyer will communicate to the client what they charge for each hour of work spent on a project, like drafting a commercial space lease agreement.
The lawyer will keep track of their hours and send the client a bill after the project.
The marketplace data for ContractsCounsel shows that the average hourly rate for a real estate lawyer specializing in commercial space leases ranges from $200 to $350 per hour.
Flat Fee Rates for a Commercial Space Lease Agreement
Under a flat fee rate arrangement, the lawyer will estimate the amount of time a project will take and quote their client a price. If the client agrees to the price, they will pay the fee upfront before the lawyer begins work.
The client benefits from knowing exactly what they need to pay, and the lawyer benefits by collecting their fee upfront. The downside for the attorney is that if a project takes longer than expected, the lawyer will not be compensated for additional time.
ContractsCounsel's marketplace data shows that a commercial space lease agreement's average flat fee rate is $612.63.
Get Help with a Commercial Space Lease Agreement
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