On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Wednesday, November 1, 2017.

Commercial leases do not usually follow a standard arrangement. Rather, the terms of commercial leases can vary widely depending on the real estate market. In a hot rental market, for example, the property owner may have the upper hand in negotiations. In a stagnant market, the renter may have more power.

That’s why it is common for both parties to negotiate the terms of a commercial lease. When negotiating a commercial real estate lease, there are a few important things to take into consideration.

Rent and potential rent increases

The price of rent for a space is determined by the landlord, who takes into consideration the square footage, cost of maintenance, and other costs associated with the property. The cost of rent and potential annual rent increases will be important factors in a commercial lease, and can frequently be negotiated.

Term length

The length of a lease—otherwise known as the term—will be another crucial detail. The length of the term usually depends on how long the tenant foresees keeping their business in the space. Property owners tend to prefer a long-term lease because it circumvents the costs of trying to find a new renter.


A commercial rental space may sometimes need improvements, depending on what the renter needs it for. The landlord and tenant can negotiate on who pays for improvements, how they will be implemented, and who will oversee them.

Permitted use

Commercial leases usually include restrictions regarding what the space can be used for. Negotiating broad usage terms can be beneficial in case the business expands or the occupant wants to sublet the space.


Finally, in the chance that the business fails or moves to another location, a commercial real estate negotiation can determine whether the space can be sublet to another tenant.

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