Negotiating A Commercial Lease

So you found the ideal space for your new office or shop. Everything checks out perfectly, and now its time to meet the landlord. Before you sign on the lease, do take note of the following tips and pointers.

Basic lease cost
The main component of your lease agreement would be the basic lease cost, which comprises two parts:

• The monthly cost, which is derived by multiplying the cost per square foot by the total square footage of the space, then dividing by 12.


• Common area maintenance costs, which include common areas such as walkways, driveways, hallways and in some cases, restrooms. (This may or may not apply in your instance).

Items covered in the lease
The lease agreement should also spell out exactly what your monthly payment covers, and any benefits and entitlements, etc. Any other additional costs must also be stipulated in the lease agreement, along with clear instructions of how the payments are to be handles. Examples of these costs are:

• Property taxes


• Landscaping and ground maintenance


• Repairs of common areas


• Repairs and maintenance of your rented unit


• Utilities and refuse collection


• Insurance on property


• Roof repairs and maintenance


• Non-structural repairs and maintenance


• Mechanical system repairs, maintenance and replacements

Fitting out, repairs and renovations
Before you move into your new space, it is likely that the space will require some renovation work. Some landlords leave the work to the new tenant's discretion, while others may insist on selecting from a list of preferred contractors. In any case, the lease agreement must spell out what's allowed, and who will pay for it.

Duration of the lease
Most landlords prefer a longer term lease as it would mean guaranteed income for the period. You can use this general principle to your advantage by offering to sign on a longer lease, but at a reduced monthly cost.

Any other items
Besides the lease payments itself, the lease agreement should also contain the terms and conditions applicable to other aspects of your commercial space, such as restrictions on signages and sub-leasing. It is generally worthwhile to hire an attorney to look through the lease agreement for any hidden clauses before signing.