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Mastering commercial lease negotiations: A guide to better terms

On Behalf of | Jan 15, 2025 | Real Estate |

Finding the right commercial property is just the first step in setting up a new business or expanding an existing one. The next crucial step is negotiating a lease that meets your needs and sets your business up for success. With the right lease negotiation tactics, you can secure favorable terms for your property and focus on growing your business.

Preparation is essential

Before you even think about signing on the dotted line, you must arm yourself with information. When assessing a space for lease, consider what your business needs to thrive. Think about:

  • Space: How much square footage do you need now? How about in three years? What type of space do you need?
  • Location, location, location: What kind of foot traffic do you need? Is being close to other businesses important? Where are your customers?
  • Budget: What can you realistically afford in rent? Do you have any extra expenses?

Once you understand your business needs, research the current Alberta commercial real estate market. What are similar businesses paying for rent in comparable locations? What are the inflation and interest rates? Are domestic or international issues on the horizon that could impact your business?

This research gives you valuable leverage during negotiations.

Key negotiation terms

Once you’re informed, focus on some key terms of your lease. Pay close attention to terms including:

  • Rent and lease terms: Discuss strategies for negotiating favorable rent and lease duration. Consider shorter terms if the market is volatile, or secure longer terms at a stable rate if the market is rising.
  • Renewal options: Secure renewal rights to maintain flexibility for your business. This ensures you aren’t forced to relocate unexpectedly, which can be costly and disruptive.
  • Maintenance and repairs: Clarify who is responsible for maintenance and repairs. This will avoid unexpected costs down the line and keep your budget predictable.
  • Exit strategies: Ensure you have a clear exit strategy. Options like subleasing or lease termination clauses provide a safety net if your business needs change.

These are just a few elements that can be crucial to avoiding potential pitfalls and securing terms that align with your business goals.

Negotiating a commercial lease can be complicated, but being prepared and understanding the key terms to focus on can make it easier to secure a favorable deal for your business.

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