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Negotiation of commercial lease terms possible

7/13/2016 | Real Estate Blog

One possible way that Pennsylvania business owners can save money is by negotiating their commercial leases. Property owners understand that it is normal to negotiate the terms of commercial leases since there are no standard forms that are used. When the market is weaker or the property is not in a prime commercial spot, more terms may be negotiable.

Business owners may want to start by negotiating the length of their leases. If the location is a good one for the business, then agreeing to stay for a longer period may give the business owner the ability to negotiate other terms more easily. Property owners save the time and expense involved with releasing a space when their tenants stay for longer periods, making them more willing to give concessions in other areas.

Business owners may also want to negotiate grace periods during which their monthly lease amounts won’t be raised. When the grace period expires, they may want to negotiate that the percentage of increase will then be capped at a specified amount. They also may want to negotiate the price per square foot that they will be charged in the calculation of their monthly payment. Property owners normally take the annual cost per square foot and then divide that figure by 12 to arrive at the monthly lease amount.

Attorneys who have commercial real estate experience may be better able to negotiate favorable lease terms for their clients. When the proposed lease has been delivered, such an attorney can review it in order to see what provisions could potentially be troublesome in the future.