Beyond Rent: Other Charges To Negotiate For A Commercial Lease
Many businesses focus on rent when negotiating commercial leases. The focus makes sense since rent is typically the largest expense in a commercial lease agreement. However, such leases also come with other expenses that you should negotiate.
Below are examples of such expenses.
Janitorial services cover the cost of basic cleaning. Both you and your landlord want the leased premises clean. For the landlord, cleanliness helps maintain the property's curb appeal and attractiveness to prospective clients.
Many landlords offer janitorial services to their tenants. However, the services rarely cover the entire premises. For example, many tenants are responsible for cleaning nonstandard areas, such as their kitchen spaces. You can negotiate the fees for janitorial services and their coverage.
Your landlord incurs some costs to run and maintain their property. The costs depend on location, property size, and government laws and regulations, among other things. For example, the landlord has to pay:
- Property taxes
- Property insurance
- Maintenance costs (for the common areas)
- Property management costs
- Utility costs
You pay some of these costs since you also benefit from the property. The landlord may incorporate these costs in your base rent or charge them separately, depending on your lease.
Many tenants prefer to charge their tenants operating expenses fees and handle the payments. Such a landlord may also charge administrative fees for handling the operating expenses. Negotiate the operating expenses and administrative fees for the best rates.
Options are clauses that define pre-negotiated future lease terms. For example, you may pre-negotiate terms that allow you:
- Renew your lease
- Expand your lease
- Contract your lease
- Terminate your lease
For example, the options clause defines how long you have before changing your lease, whether you reduce or increase your square footage. Your landlord may negotiate these options if you have a strong rental application.
As the name suggests, overtime services charges cover services you might need from your landlord outside their normal business hours. For example, your landlord might charge you to use the freight elevator late at night. You can negotiate such charges, depending on the frequency and usage time, among other factors.
From the above examples, you can see that commercial lease negotiations can challenge inexperienced persons. You might have to operate with the lease term for months or even years, so you should get everything right the first time. Contact a real estate agent to go over your lease terms and negotiate the best deal for your circumstances.