Negotiating or renewing a lease?

There is only one rule governing commercial leases - there are no rules!  A commercial lease is considered a negotiation of business equals so there are none of the protections found in business-to-consumer transactions.
     It's been said before but it can't be repeated too often; the only part of the agreement that matters is the part that's written down.  Prospective tenants are sometimes too fixated on a specific opening date or location to really pound out the details and foolishly agree to 'work out the details later' - to much future regret.
     Prospective tenants often overlook significant opportunities to improve their position, so here are a few reminders.
     Forbearance: While the actual monthly rate is often difficult to move (usually because the landlord's lender is seeking a specific revenue model), it is sometimes possible to negotiate a gap between the first day of occupancy and the date the first rent payment is due.
     Kick-out clause: a prospective tenant can negotiate the right to terminate if certain conditions occur. Uncertainty is a factor in any venture and a kick out provides the means to mitigate the risk of a long-term lease.  Kick-out clauses are difficult to negotiate and landlords who agree require substantial advance notice of termination, along with a penalty. A reciprocal kick-out clause could be requested if the landlord is relying on the prospective tenant to drive traffic.

     Everyone loves a list, so here are 10 lease negotiation mistakes:

1. Not giving yourself enough time to evaluate location opportunities
2. Thinking short term and failure to consider long-term business needs
3. Underestimating premises conditions, tenant improvements and occupancy costs
4. Miscalculating total net monthly space costs and off-lease fees
5. Failing to verify leased space and common area measurements
6. Overlooking regulatory risks from zoning, traffic or other limits on use
7. Not vetting landlord-provided services and tradespeople
8. Paying too much for rent, deposits or management fees
9. Failing to negotiate limits on personal guarantees
10. Not seeking professional representation

     While location is important (per the old joke about the three most important things...), no location is worth the cost of a bad lease. Commercial leases are non-negotiable once signed, so resist that urge to tell yourself you'll "work things out later" - later is now!

Consult attorneys and advisors before you sign - coming to us after the fact will serve no one, least of all, you!