I'll be moving shop soon, and just wanted to tap into your experience with commercial lease agreements so I don't do anything too stupid. I'm a one man shop in VA and my previous landlord was very informal. What terms should I avoid, and what are reasonable terms to negotiate?
(Business and Management Forum)
From contributor D:
Lots of things to keep an eye out for, but it all depends upon your market and your specific needs. What I've done is have a friend who had been a lawyer look over the lease provided, and point out things that stuck out that could be a problem (obviously, the lease is going to be heavily favored towards the landlord, and commercial leases in particular). I then sat down with the landlord and discussed specific issues (there was a limit on how many people could be in the shop, for example). I then wrote a rider that modified some of the stuff. But my experience is, talk about things that cause concern - some of it is negotiable and just thrown in by their lawyers.
It is a good idea to have your attorney look over the lease, as many items are negotiable, and also for you to understand everything about the lease. Commercial leases usually have clauses that allow for rent increases caused by increasing property taxes and utilities. You want to look at that close and make sure you understand.
In general we’ve had good tenants over the years and bend over backwards to make it work for them. But like anything, it's good for both parties to have a clearly understood agreement.
-Make sure you have the exclusive option to extend or renew the lease after the lease has expired.
-Everything is negotiable. Maybe you'd be willing to lengthen the term of the lease for 1 year if the owner puts in new landscaping, or whatever... Use the terms of the lease as leverage to get what you want out of the deal. Think win-win.