The Art of Lease Negotiation
2/13/2014 9:35 AM
With the exception of human resources, the single largest operating expense for most businesses is the cost of their real estate. For those businesses that do not own the space they occupy, the cost to occupy that space is driven by the terms of a lease agreement. These business owners are usually best served by making one critical path decision regarding lease negotiations – engage non legal real estate expertise when negotiating the terms of a lease.
Negotiating a landlord-tenant lease, which may be a complicated binding contract, is a skill honed over many years and hundreds of small skirmishes. It’s not a task to be taken lightly or delegated to someone with little experience in the nuances of the process. After all, once fully executed, a lease mandates total rent payments far into the future, irrespective of economic dynamics at play in the marketplace. Less experienced negotiators often overlook or under estimate the impact of the following lease components:
- How is base rent calculated? Is the space rent-able area or usable area? What’s the building’s common area factor and does it affect the final rent rate?
- What’s included in the base rent?
- How and when will the rent increase?
- Are there costs in addition to the base rent?
- If the space needs to be improved, who will pay for such improvements and who will do the work?
- What are the limitations, if any, on signs and identification?
- How is client/customer parking handled?
- Are there any restrictions on business hours or type of business?
- What renewal options are available and at what rates?
- Who bears the cost of major improvements to the property?
Prospective tenants need an experienced real estate professional at their side when negotiating a document as important as a lease. That’s why so many business owners have chosen to use the services of The Cabot Group when it’s time to expand or relocate. The Cabot Group has over forty years experience in landlord-tenant relations and has negotiated leases for hundreds of clients in virtually every business sector. We are the professionals you need at your side to guarantee that you get the best possible economic deal available with terms you thoroughly understand. Trusted real estate advisors and services providers—that’s The Cabot Group.