Every business requires a place of operation. While some businesses purchase property on which to operate, and others merely operate out of the owner’s home, the majority of businesses lease a commercial space. Leasing commercial space is no small task for business owners. First of all, location plays an enormous role in the success of a business, so finding the right property is of paramount importance. Finding the right property, however, is only the beginning, as businesses also have to negotiate favorable lease terms.
Commercial leases are quite different from residential leases in that a standard lease agreement does not exist. Because landlords and tenants provide the terms of each lease agreement on a case-by-case basis, there is much room for negotiation and flexibility. This means that businesses should know what they require of a commercial lease before they proceed with a negotiation.
A good starting point for leasing a commercial space is sitting down with a professional and drafting a letter of intent to provide to the prospective landlord. This letter should outline each of the terms that the business wants included in the lease agreement. Terms such as rent, time, maintenance responsibilities, assignment rights, and definition of common areas should be included. A letter of intent provides landlords with a good idea of what businesses expect, and opens the negotiation process. Sometimes landlords are amenable to the terms of the letter of intent and the parties can move immediately to the lease agreement. Other times, however, parties can remain in negotiation for a period of time. Businesses are best served by recruiting a professional to assist with this process.
