Womens Guide to Negotiating a Commercial Lease

Womens Guide to Negotiating a Commercial Lease Womens Guide to Negotiating a Commercial Lease Women should not be intimidated by negotiating a good deal in commercial leases,  but negotiating starts with asking the right questions. Once you have answers to the right questions, you can research the types of leases, leasing terms, and best negotiation methods. You will also be better able to plan your finances and your negotiation strategies if you know what questions to ask. There are many questions to ask before leasing a commercial property. However, you should include three very important questions to avoid overpaying for business space. What Type of Commercial Lease Is Being Offered? The  type of lease  being offered is probably the most important item to consider first because it determines how you will be charged rent. The terms of  commercial real estate leases  are defined by the  type of commercial lease. Some commercial leases are straightforward, but most are not. If you do not know what a  Triple Net Lease  is, or what Load Factor means, or how your rent will be calculated (it is rare that you will be charged only for the actual  square footage  you will occupy), you cannot  negotiate better terms. Is the lease full service or percentage based? The key to negotiating terms of a lease may be contingent on first negotiating the  type of lease. Ask to see a copy of a sample lease. A landlord who refuses to allow you the time to review lease terms before signing is not one to be trusted. Commercial leases can be just a few pages but are typically 15-20 or more pages in length. If you require a lawyer to review the terms and the landlord refuses, do not sign the lease! Types of Commercial Leases There are many  types of commercial leases and some terms may overlap. However, certain terms, such as services (e.g., janitorial or utility), applicable to one lease may not apply to another. Therefore, it is important that you specifically understand the type of lease, as well as if it includes services, load fees, percentage fees, or other fees. Types of leases typically offered in  commercial leasing  include: Double net leaseFully serviced leaseGross leaseNet leasePercentage leasePercentage rentRentable square feetSubleaseTriple net lease (also known as NNN or net net net lease) Are the Terms of the Commercial Lease Negotiable? All commercial leases should  always  have at least some  room for negotiation. A completely inflexible landlord is someone you do not want to lease from because inflexible often equates with unreasonable. If a landlord is unreasonable during  lease negotiations, they may also be unreasonable or unfair once you are in the space and need repairs or consideration for unforeseen items such as more parking, access to equipment, or telephone rooms. Negotiable terms  include the length of the lease, free rent,  smaller security deposits, and concessions for the tenant upgrading the space. Other areas typically negotiated in commercial leases include lower rent, caps on rent and load increases, and reduced or eliminated fees. When there is absolutely no room for negotiation, you immediately know two things: Your landlord is unreasonable and you can probably do better elsewhere. Sometimes the best way to change the terms of a lease is to first negotiate the  type of commercial lease. For example, a  triple net  lease requires tenants to always pay all or part of the taxes, insurance, and maintenance associated with use  of the property. These fees are paid in addition to the tenants regular monthly rent. If you do not want to pay all these fees, you should ask for a different type of lease. What Insurance Coverage Does the Lease Require? Few business owners new to commercial leasing will look beyond their actual monthly rent and utility costs when determining if a space is affordable, but you also need to consider your insurance costs. Moving from a  home-based business  to a brick and mortar space will increase the cost to insure your business because, in addition to your own  insurance needs, your landlord will probably require you to purchase insurance to protect them as well. As long as you occupy the space, you will need insurance coverage, which becomes a  fixed expense  along with your other rent expenses. How Much InsuranceWill You Need? Make a point to ask what type and amount of insurance coverage is required by the lease. This may seem like an unnecessary question, but many  small businesses  are uninsured or underinsured. Commercial general liability (CGL) insurance offers the landlord protection from being sued under certain situations and this should be spelled out very clearly in your lease. While CGL insurance offers you some protection, the landlord requires it to protect their own interest, not yours. Some landlords require  insurance coverage  that may be expensive, or worse, coverage that you cannot get. While most businesses can get CGL insurance, if a landlord requires  product liability insurance, some businesses may have trouble  finding coverage, or coverage could add thousands of dollars to your  insurance bill. Is Insurance Required Prior to Moving In? You should also know in advance if the insurance coverage must be in place before you can move in. Most landlords will require that you have a minimum (that they set) of CGL insurance prior to handing you keys to the space.