7 Tips for negotiating a commercial lease
Making the terms clear from the outset means that the negotiations should be seamless and assist in a longer term, mutually beneficial business relationship.
Generally speaking, common sense and an experienced property manager, will go a long way in ensuring both parties remain happy throughout a lease term.
To really make the process stress free, there are some key steps that to follow that will allow for a mutually beneficial business relationships.
1. Agree on the terms in a heads of agreement
Get commercial terms of the Lease arrangement drawn up in a Heads of Agreement and signed off by both parties prior to instructing a lawyer to prepare the lease. This should reduce the chance of disputes over the commercial terms during lease execution and over the course of the lease term. A good commercial leasing agent will be able to provide a tested Heads of Agreement.
2. Utilise a lawyer
Always have a lawyer prepare the lease documents. A lawyer with experience in commercial leases is highly recommended and this allows the deal to be in order and run smoothly. Some generic Lease documents are available, however Lease’s are really only tested when disputed occur, this is when a specific agreement tailored for the deal will clarify key points and parties respective obligations.
3. Highlight tenant obligations
Make sure the tenant’s obligations are clearly highlighted by the lawyer in the lease document. Keeping the lines of communication open in these beginning stages between landlord and tenant is imperative.
4. Get appropriate approvals
If there are to be any fit-out works undertaken by the tenant, be sure approval is obtained from the appropriate regulatory bodies – for example, local councils. This must always occur prior to any works commencing.
5. Use an experience property manager
Employing an experienced property manager to handle your property is crucial not only for you, but for a prospective tenant as well. Having your property in capable and professional hands allows you peace of mind and assurance your property is maintained and both parties are getting appropriate advice.
6. Conduct pre-lease inspections
Conduct a pre-lease inspection of the property and document the condition of the tenancy prior to lease commencement. This step is beneficial for both landlord and tenant. It is even better if you can take photos to document.
7. Look after mechanical services in the building
The final step is for the owner to ensure the mechanical services of the building – for example: lifts, air-conditioning, and the intercom – have service agreements in place and are maintained properly. For commercial property leases, most tenant issues arise due to issues with the breakdown of these services and can add unnecessary strain to everyone involved. Therefore, having all these agreements in place from the beginning of the lease is the best way to handle them.
To discuss how Lever Property can help both owner’s and tenant’s in these negotiations, please contact us here.
