The current real estate market is ideal for business owners looking to upgrade or find a new space, but even in this buyer’s market negotiating a lease is still a challenge for prospective tenants and requires careful research and diligence. Once you have found your dream location, take a look at a few of these ways to make sure you are negotiating the best lease you can get:
Setting Your Lease Term
Your first negotiating point in a lease will be the term and the rent. Ideally, your goal is to avoid over committing while still allowing yourself flexibility in the long run. Most small businesses aim for a one to two year lease term with the option to renew. It is also important to address rent increases over your term, along with renewal options, to avoid getting hit out of the blue with rent increases, which can be a sudden blow to your margins and cash flow.
Be prepared for a landlord to push for a long-term lease. Utilizing a broker who knows the market and landlords’ tricks is a smart idea, but be aware that brokers work for the landlord and get commission on the total value of your lease. You might talk to a real estate lawyer before consulting a broker to get some recommendations and some help navigating negotiations.
Read Your Lease
It seems like a no-brainer, but it can be tempting to skim through some of the dull parts. However, it is important to go over all of the details of your lease and even hire a commercial real estate attorney to review the clauses and fine print.