Commercial Lease Negotiation

Commercial Lease Negotiation

A regional business identified commercial real estate that complemented its needs in terms of size, location, construction type, etc. Since the space was being marketed directly by the owners – sophisticated real estate owners and operators – our client felt disadvantaged in negotiating lease terms. After all, they were not real estate professionals. Moreover, the landlord refused to cover the commission for any Realtor, should a client choose to introduce one to negotiate on their behalf.

Not knowing what to do, the business originally turned to its attorneys to negotiate the lease. However, the lawyers were aggravating the situation, and an impasse had been reached. The company then contacted us.

We negotiated the lease terms on behalf of our client, focusing on three key aspects:

– Landlord’s contribution to client’s construction costs
– Annual rent and rental increases
– Ability for client to expand space or relocate during lease term without penalty

Throughout the negotiation process, we were careful to protect the relationship with the landlord, knowing that, if were able to consummate a deal, a contentious negotiation experience could adversely affect our client during the lease, especially if the client needed to expand or relocate during the lease term (in which case the landlord could be asked to contribute to additional construction costs or to let the client break their existing lease).

In the end, we secured a lease at a very competitive rate, and the landlord agreed to absorb most of the construction costs, including many “untraditional” construction expenses specifically related to our client’s business. The lease also included a generous amount of free rent as well as a liberal exit clause.

Other negotiation examples include:

Negotiating a Private Placement
Negotiating the Sale / Purchase of a Business