Negotiating better commercial leases for startups

So you’re finally ready to move into to a dedicated real-world location for your growing startup. Nice! But missing that one crucial detail that changes everything is not something you want to find out after you sign a lease. With money on the line, not to mention the investment in location, it pays to ensure it gets done right. 

On top of everything else you have to deal with, you may not have time to become an overnight expert in commercial leasing law. Many business owners trust real estate lawyers to be that seasoned second opinion working to get them the best deal.

It’s not just about rent

Rent is a big deal. But whether it’s a mall location, space in an office building, or a historic storefront on a main street, there is a lot more to consider than the straight-up monthly cost.

For one, a landlord may want a percentage of sales from a retail tenant in addition to a fixed rent. The way that your business engages with online versus in-store sales could affect your rent negotiating position just as easily as a plethora of other facts. Is the property sought-after? Has the landlord had difficulty with vacancy? These things could bring the cost down, but only if you know how to leverage them. 

Lease terms and escape clauses

A landlord is likely to favour the certainty of cash flow that a long-term lease will give them. This might well work for many businesses, but from the possibility that you may have to scale up or down sooner than expected to the chance of sudden change in nearby businesses — the departure of an anchor store your sales indirectly rely on, for example —you might need assistance effectively negotiating a shorter lease or escape clauses. 

Knowing what’s fair or possible with a given landlord is a complicated question. You may stand to gain concessions you don’t even know are possible with an expert on your side.

Subleasing as a solution 

Sometimes, a company that’s outgrown its space before the end of its lease will sublease their space to new tenants. Such opportunities might come with cheaper rents and a considerable turn-key advantage of already being set up for your needs.

But you need to be aware of all the moving parts of these arrangements. You should understand your obligations both in your lease, and the obligations of the original lease. And if you’re not looking to sublease now but are hoping to expand your business yourself, it’s wise to build-in some good subleasing options yourself.

Get expert help so you can focus on what matters

Commercial leases are only getting more complicated as landlords attempt to adapt amid rapid change in how we all do business. The above issues are a mere slice of the full range of things that could affect how you should approach your lease. So, give yourself a little peace of mind, reach out to a commercial real estate lawyer like those at Juriscorp, and free up that time and energy to concentrate on what really matters: growing your business.

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