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How to Get the Best Commercial Lease Terms

Posted by Devin on Mar 24, 2015 7:00:55 AM

Commercial Lease Terms

A commercial lease negotiation can be difficult to navigate if you’re unsure of what you’re doing. However, with the right information it is possible to lease a great property on Long Island without having to pay a substantial amount of money each month. Listed below are four stipulations that should help you get the best commercial lease terms for your business.

Improve Your Commercial Lease Terms with These 4 Tips

1. Lease Duration

When you first negotiate your commercial lease terms it is essential that you determine the length of your lease. It is also one of the few ways for you to level the playing field in what can be a fairly lopsided contract (in favor of your landlord). So, if you have the freedom to do so, it will be in your best interest to enter a long-term lease (i.e. a lease longer than one, five or 10 years). By committing to a long-term lease you provide your landlord with a steady flow of income that should prompt them to lower the price of your lease.

2. Rent-Stabilized

As real estate prices continue to climb it has become increasingly difficult to find rent-stabilized properties. That means your lease will get more and more expensive as the years go on, reducing your ability to invest money back into your business and making your long-term lease downright unbearable. To get the best commercial lease terms you should instead focus on finding a property that is either rent stabilized (the landlord can only increase your rent by two percent per year) or install your own rent stabilization by stipulating a set rent increase in your contract. Doing so will help keep prices down and help you avoid any unexpected rent increases.

3. Improvements & Alterations

Commercial properties typically require some alterations before they can be considered suitable for your business (and all of those improvements can get expensive, fast). To get the most bang for your buck and the best commercial lease terms you should try to work any alterations into your contract. Doing so will ensure that you are not responsible for all construction costs (that responsibility falls on your landlord) and will drastically improve your commercial lease terms.

4. Sublease and Sublet

When you sign a long-term lease it pays to have an escape clause. While most landlords won’t let you have a literal escape clause, they will allow you to sublease your office space if you are still under contract but are forced to move your business elsewhere. Subleasing is a must-have in any safe, long-term lease so be sure to include it in your commercial lease terms.

Having a rent stabilized, long-term commercial lease that you can sublease and alter (at little to no personal expense) will ensure that you get the best commercial lease in what may be the country’s most competitive real estate market. With these four commercial lease terms in your back pocket we have faith that you’ll be able to acquire a lease that is beneficial for your business. Best of luck!

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Topics: lease, commercial real estate

Smith & DeGroat Real Estate

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