Top 10 Lease Issues Other Than Rental Rate

As you negotiate your commercial real estate lease, there are many different clauses that could impact your tenancy. A lower rental rate may not always be your companies main priority.  Many companies only focus on the rental rate and miss opportunities for flexibility and the possibility that their business could change during the lease term.

Here are ten issues to negotiate other than your rental rate.

  1. Expansion Rights – If your company plans on growing, you must have expansion rights. What’s the point of a low rental rate if your employees can’t fit inside the space if you win that big account?
  2. Tenant Improvement (TI) Allowance – Tenants need to be very aware of the TI allowance. Landlords may offer a low rental rate, but not provide any TI. That means you are putting your own money into the Landlords building and the landlord is not improving your space.
  3. Months of Free Rent – Depending on market conditions, you may be able to occupy and use the space without paying rent as an incentive for a new or renewal lease.
  4. Discounted Parking/Reserved Parking – Have you ever thought about how much parking costs you and your employees per month? Would your C-level employees appreciate reserved spots near the entrance?
  5. Signage Rights – If your company wants to have a visible presence in the building or on the street, signage rights are very important.
  6. Assignment and Subletting – While we all hope the situation never occurs, you want to have flexibility if you downsize the company or vacate with the option of potentially recovering some of your rental obligation.
  7. Exclusivity clause – Help keep the competition away. Which is very important in retail or medical space.
  8. Option to Audit the Landlord’s books – What are you really paying for?
  9. Self-Help Clause – If the Landlord does not perform repairs in a timely manner, you want to be able to protect yourself and your company image.
  10. Early Exit/Downsizing options – Having the option to leave the space before the lease expires is a mandatory clause for some companies. Negotiating the time of notice, penalties, and fees provides flexibility for your business.

As a bonus, Termination, Extension options, and the Right of First Refusal are some other clauses that can be negotiated. A tenant advisor will discuss your most important lease issues for any project.

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