Commercial properties: negotiating your lease terms

Commercial leases can be complicated with pages of contractual terminology and legalese, and it can sometimes even be a contentious process to negotiate the terms of a lease or a rent review. 

Before signing a lease, it’s essential to understand the document and how to get the most favourable terms possible, while ensuring it meets your requirements as a business.

Can you negotiate rent?

There are a number of benefits of negotiating commercial leases and carefully considering specific terms to request in this type of contract. This includes negotiating the rent to a fair market value. Having a rent review can also be advantageous, allowing greater flexibility, regular break clauses and the opportunity to negotiate favourable terms.

It’s important to keep in mind that it’s not only about how much rent is. There are other common areas for negotiation when it comes to commercial property leases. A chartered surveyor and lease advisory expert can help you negotiate and secure strong lease terms in today’s market.

Advice for negotiating a commercial lease

There are a number of things to do and think about when negotiating a commercial lease. 

1. Research the local market.

It’s helpful to start by taking the time to understand the local market. This can help you figure out if you’re getting a good deal or not. If you sign a lease before thoroughly researching the local market, you might miss out on opportunities better suited for your business.

Look at similar commercial properties and compare the prices, taking into account what’s being offered. This could even help you negotiate a lower rent price if it’s higher than other comparable properties in the local area.

2. Understand your business needs.

Before negotiating and agreeing your lease terms, think about your individual business needs and priorities. You need to ensure the property works for your business and the space it will require moving forward. It’s also important to check if the lease or property has any restrictions that would prevent you from doing certain key business activities.

3. Seek legal advice.

As commercial leases can be so complex and difficult to understand, it’s recommended to seek expert legal advice before signing a lease. If you don’t get appropriate legal advice, you could end up signing a lease that doesn’t meet your requirements as a business, or it could even place substantial obligations or restrictions on you that you weren’t aware of. 

Hire a qualified solicitor to help inform you about a lease and assess whether it meets your requirements. They can even help you negotiate with the landlord or suggest alternative terms for the lease to align with your requirements and goals.

4. Negotiate added extras and caps.

It can also be beneficial asking for added extras. If the lease doesn’t include things like car parking or spaces in a communal car park, that’s an area you could try negotiating as an added extra, or you could request more parking bays if a base amount is already included. 

Additionally, if there are communal areas, you could try to negotiate the use of certain facilities like any communal rooms or grounds as an added extra.

When you sign a commercial lease, there might also be additional charges, and it can be helpful to have a cap agreed for those. For example, if your lease is part of a wider communal area with certain facilities, the landlord may require you to contribute to maintaining those areas, so having a cap in place will ensure your liability for that doesn’t exceed an agreed amount.

5. Consider break clauses and rent-free periods.

You could think about asking the landlord for a rent-free or reduced rent period too. These are sometimes offered as an incentive to attract tenants. It may also be offered if the property requires decorating or repairs, and you’re willing for those to be carried out at the start of the lease.

On top of that, break clauses, which denotes your rights in ending a lease early if you give the agreed notice period, should be considered. This can provide flexibility in case you need to vacate the premises before the end of the lease. Landlords may also request that they have a break clause to be able to end the lease early with the agreed notice period.

Commercial lease advisory services

As commercial leases can be so complicated, it can be really valuable to have an expert by your side. Eddisons provide commercial lease advisory services for both tenants and landlords, providing knowledge and experience across all aspects of lease management to create and add value.

We can help you make informed strategic decisions and maximise your commercial interests when negotiating commercial leases, managing rent reviews or dealing with lease exits. Get in touch for more information about our commercial lease advisory services.