Top 7 Negotiation Tips for Leasing Commercial Property

Here are the top seven tips to help you secure a lease that works for you, minimising hidden costs, and one that sets you up for success.

1. Research Market Rates and Comparable Properties 🧐

Start by researching rental rates for similar properties in the area. Knowing the going rate helps you negotiate from a position of knowledge, giving you leverage if the asking price is higher than market value. 

2. Define Your Lease Terms with Flexibility 🚥

Whether you want a short or long-term lease, discuss options for renewing, extending, or breaking the lease. A shorter lease with renewal options can give you flexibility, while a longer lease might allow you to negotiate lower rent. It’s important to find terms that suit your business’s growth and stability.

3. Negotiate for a Rent-Free or Reduced Rent Period ↕️

Many property owners are open to offering a rent-free period or reduced rent at the start of a lease, especially if they know it’ll take time for your business to ramp up. This can provide valuable breathing room for expenses during the initial setup and is often easier to negotiate than a direct rent reduction.

4. Seek Clarity on Operating Expenses and Additional Fees 🌁

 Commercial leases often come with additional costs, like outgoings (rates and insurance) , maintenance fees and repairs. Clarify which fees are your responsibility and which are the property owners. Negotiate caps on variable costs and get transparency on any shared or “common area” expenses to avoid hidden costs. Make sure you also know how many car spots you’re entitled to if this is important to your business.

6. Property Improvements 🔨

 If you believe the property will need improvement, be clear on whose responsibility this will be and have any agreements in writing. Many property owners will cover some or all of the costs, especially if the upgrades add long-term value to the property. Be sure to clarify who owns the improvements if the lease ends.

7. Negotiate Rental Increases ✨

   - Commercial leases often include rent increases over time. Try to negotiate a cap on the percentage increase, or base it on fair market value adjustments. This can prevent sharp rent hikes that could strain your budget in the future. 

Once you do have a lease in place, build a positive relationship with the property owner/agent

Strong relationships can lead to a more collaborative lease experience. Be open and professional in your communications. 

Good rapport can make it easier to negotiate renewals, handle issues, and potentially even gain flexibility on terms.

Also remember, the property owner and agent don’t need to know if your business is doing well. Less is more when it comes to this particular detail with your landlord.

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