Tips for Negotiating Commercial Leases, Avoiding Common Pitfalls

Oscar R. Rivera
August 30, 2018


For many businesses, finding the right location at the best possible lease rates and with the best terms is among their most pressing and impactful challenges for the future of the enterprise.  The business location and the costs of leasing the space can often be among the foremost determining factors in a company’s long-term success.  As such, the negotiation of the terms of commercial leases is typically of the upmost importance.

For tenants, the best way to start is for the principals to gather information on the neighborhoods and locations that hold the most promise.  In addition to turning to highly experienced and qualified commercial real estate brokers for guidance, they should do their own research and become educated.  Prior to any meetings with prospective landlords and their representatives, they should take the time to conduct a thorough SWOT analysis to identify the strengths, weaknesses, opportunities and threats related to every prospective property.

This exercise, which is also beneficial for landlords to employ when assessing their lease offers, will help to enable businesses and organizations to develop a list of the priorities that they seek for each and every location.  Both landlords and tenants can use this form of analysis to create an agenda for their discussions.

Once the lease negotiations commence, it is vital for both parties to understand the importance of reaching an equitable and mutually beneficial accord.  The tenant’s success will ultimately help to fuel the landlord’s success, and vice versa.  If terms are being discussed that simply will not work for either party, the negotiators should immediately express and address their concerns.

It is very important to be reasonable and maintain an open mind.  Neither party should be asking for terms and conditions that they would be unwilling to accept if the shoe were on the other foot.  By putting yourself on the other side of the table, you will have a better chance of reaching a final agreement that will constitute the beginning of a fruitful business relationship.