Negotiating a Commercial Business Lease

Before you go into business you need to understand the pricing structure of a business lease. Unlike apartments or houses, commercial leases are not usually leased on an annual flat fee basis. In addition, there are other factors that are open to negotiation between the property owner and potential tenant.

Negotiating a Commercial Lease

There are several things you need to consider when you are seeking a commercial business lease for your new business. The first factor to keep in mind is the actual cost of the lease. There are two factors that comprise the basic cost of a commercial lease:

• The monthly cost of a commercial business lease is calculated on a square foot basis rather than a flat rate. The cost per square foot is multiplied by the total footage and then divided by twelve to obtain the monthly cost of the least. 
• In addition to the actual cost of the lease on a monthly basis, the landlord will add costs for the common area maintenance (CAM). If you are only leasing a portion of the building, the CAM costs will only cover common areas such as walkways, driveways, hallways and possibly restrooms.

Other Inclusions

There are additional expenses the landlord may cover under the terms of a commercial business lease. Sometimes the landlord will pay these costs and pass them on to you while other times you will need to pay them directly. Some of the expenses subject to additional negotiation include the following:

• Property taxes (this is usually a pro-rate amount based on the percentage of the building a company leases)
• Snow removal, lawn care and landscaping
• Repairs to and maintenance of the driveway, sidewalk and parking lot
• Utilities
• Trash removal
• Insurance (usually pro-rated and shared by the tenants)
• Structural and non-structural repairs and maintenance
• Repairs to various mechanical systems

Lease Term

Commercial property landlords prefer long-term lease agreements. In fact commercial business leases are often negotiated for terms that exceed twenty-five years. If you have a new company, it is to your advantage to negotiate for the long-term in order to assure longevity and lease payments that are manageable as you build your commercial base.

Legal Assistance

Before entering into a commercial business lease, you need to make sure you talk to a lawyer who is experienced in business law, and especially the components of a business lease. You make to make sure you negotiate everything you need, and a lawyer will be able to help you do that.