For many businesses, the commercial lease negotiation is one of the most important contractual processes they will go through. The terms of the lease can have major implications on your operating costs, flexibility, and long-term profitability for years to come. It’s critical to approach lease negotiations with skilled legal counsel to ensure your interests are properly protected.
An Overlooked Area of Risk
Too often, business owners treat a commercial lease as a standard formality instead of the high-stakes negotiation that it is. They assume that the “boilerplate” language is set in stone and fail to scrutinize and push back on provisions that could be detrimental to their business. From vaguely defined rent escalations to relocation clauses to restrictions on permitted uses, the landlord’s original lease proposal is written to prioritize their own interests above the tenant’s. Failure to negotiate could easily saddle you with unanticipated costs, limitations on your operations, and reduced leverage in future negotiations.
Key Areas to Negotiate
There are a number of lease components that should be carefully reviewed and potentially re-negotiated, including:
- Rental rates and scheduled increases
- Operating costs and calculations
- Permitted uses and exclusive use provisions
- Assignment/subletting allowances
- Renewal and termination options
- Build-out periods and landlord obligations
- Compliance requirements and enforcement
- Dispute resolution procedures
Protecting Your Flexibility
For many businesses, flexibility is paramount. You need the ability to adapt to changing conditions, scale up or down based on performance, and make key decisions in the best interests of your operations. A poorly negotiated lease could restrict that flexibility by limiting site uses, transferability, expansion options, and more. Provisions like relocation clauses, use limitations, and arduous approval processes can jeopardize the agility and growth opportunities for your business.
The Partner You Need
Given the complexities involved with lease negotiations and the high stakes for businesses, enlisting an experienced real estate attorney is essential. Bayside Counsel is able to review the lease proposals through a critical lens, identify potential pitfalls, and push for more tenant-friendly terms. With expertise in real estate law and contract negotiations, we ensure your business interests are prioritized and protected in the final lease agreement.
Don’t go into your next commercial lease negotiation underestimating its importance or unprepared. Partner with Bayside Counsel to diligently evaluate every component and aggressively pursue the most advantageous terms possible. Doing so could save you from significant costs, restrictions, and headaches in the years ahead. Contact a San Diego small business attorney at Bayside Counsel today.