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HOW TO NEGOTIATE A COMMERCIAL LEASE THAT FAVORS THE TENANT

On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Tuesday, May 15, 2018.

If you’re about to sign your first commercial lease as a tenant, there’s one big piece of advice you need to follow.

Negotiate.

Unlike residential leases, just about everything is up for negotiation in a commercial lease. How much power you really have is directly related to how badly the landlord wants a tenant (or wants you as a tenant). Most of the time, however, you can subtly shift negotiations in your favor simply by following these tips:

Research the market

You’ll have a much harder time negotiating from a position of strength if you don’t know what the commercial rents are like in your market. Talk to your network of business associates about what to expect. That’s the only way to know what’s fair and counter a bad offer with authority.

Don’t accept the initial offer

That first contract may be “standard” from the landlord’s point of view, but you can bet it favors only the landlord. Experienced business professionals know not to sign the “standard” contract. Take it with you for a careful review, whether you’re doing it alone or working with a broker or attorney.

Know your deal-breakers

Go into negotiations with a clear set of priorities. Know what you absolutely have to have and what you’re willing to give up. That way you can give up some ground that doesn’t really matter to you in order to gain what does. That can be an important psychological play when you’re negotiating because everyone wants to feel like they won some sort of concessions.

Be willing to start over

Ultimately, being ready to forget the whole deal and go somewhere else is important — both for your security and from a standpoint as a negotiator. The more you want a deal, the easier it is for the other party to take control.

As always, communicate clearly and concisely with your potential landlord — but insist on getting everything in writing. That’s the only way to really ensure that you know what you’re getting.

Source: REoptimizer, “10 Commercial Leasing Tips for Tenants,” Don Catalano, accessed May 15, 2018

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