Commercial Property Leasing - Tips for Lease Negotiation

When you as the real estate agent lease commercial or retail property there are many things to consider in achieving the lease that you want and need for the landlord. Preparation is the key to the process.

The landlord may (if they are established and experienced investors) very well have a standard lease structure that they use in each property transaction. If that is the case you should be very familiar with those terms and conditions because they will quite likely impact your lease negotiations. Simply put, you cannot negotiate a lease without a full understanding of the standard lease document.

Invariably if you do not know the terms and conditions of the standard lease and work through them with the tenant as the landlord’s representative, they are likely to become a series of hurdles when the lease document moves between solicitors in the signing phase of the negotiation העברת חשבון חשמל. This just causes delay.

Here are some of the key things to consider with the standard lease document that the landlord may use:

1. The permitted use clause will place some limitations on the use of the premises. The permitted use should match the business operations of the tenant and yet not upset the tenant mix in the greater property. The best permitted use clause is very specific so the tenant cannot take liberties in the use of the premises.
2. The required time frames for the exercise of rent reviews and options will be quite specific. They should be workable, legal, and allow the landlord to make key decisions in each process.
3. The refurbishment requirements of the tenant that the landlord requires from the longer leases will be placed in the lease. In leases of 5 years or more it is common to place a requirement on the tenant to undertake certain renovation works at their cost.
4. Any renovation or relocation clauses should be explained to the tenant and the mechanism of how they will work. They will have some relevance to the property design and the tenant mix.
5. The make good provisions of the lease at the end of the lease term should be very specific to the type of tenancy and clearly define exactly what the tenant has to do at the end of the lease.
6. The payment of rent and outgoings will be explained in the lease for the tenant to understand and commit to. Ensure that those outgoings are clearly detailed as they can be extra cash flow considerations and pressures for the tenant.
7. The commencement date of the lease and the allowance for fitout approvals and construction should be considered. There may be a factor for rent free during the fitout construction time.