Tenants Representation in Commercial Leasing
July 17, 15
Commercial tenant lease agreements can be the most complex legal documents a business will encounter. There are no standard tenant agreements for commercial tenants. There is usually considerable flexibility of terms, so that the contract can be fitted to your particular business. But, these leases have to be negotiated carefully.
Commercial tenant contracts are not subject to most consumer protection laws. For example, there are no caps on damage deposits or rules protecting the tenant's privacy. The leases can also lock you in for a long time. These can be long-term and binding agreements. Many commercial leases are written on the assumption that the business can make long-term commitments.
Fitting Your Business:
Examining a potential lease, you must decide if the terms of the lease will actually fit your business. You have to be sure you can afford the lease and the length of the lease. You have to negotiate the size and frequency of rent increases.
If your business is growing, you may not want to lock yourself into a five or ten-year lease. If the location doesn't work out for you or if you are in a position where things are likely to change, you are much better off negotiating short-term leases with renewal options, if you can.
You have to consider limitations of the physical space. Many commercial leases have construction clauses which limit your ability to modify or construct on the site. If you see the potential for wanting to add cubicles, raise a loading dock, or re-wire for better communication, you have to make sure that you or the landlord will be able to accommodate these changes.
You have to make sure your lease permits you to put up appropriate signage and have access to street-signage.
If you are considering leasing in a multi-tenant mall or building, you have to make sure you will not be surrounded by competing companies.
Representation for Due Diligence:
Many business find professional tenant representation an indispensable ally in the negotiation of a commercial lease. Engaging a firm with specialty knowledge of both the local commercial real estate market and commercial real estate law can help you prevent costly missteps.