Negotiations – The World is Your Oyster

Negotiations – The World is Your Oyster

What are you paying monthly, annually, per square foot, over a 5 or 10 year period – all valid questions? The mighty green dollar sign is the elephant in negotiations – at time’s it seems like it is all a client can focus on.

Don’t get us wrong, we want you to secure as low as an occupancy cost as possible, after all – rent is often a top 3 company expense. However, it’s important to not lose focus on the loftier picture, as occupancy cost is simply one piece of the puzzle of a commercial lease. Commercial leases provide a wide array of opportunity on both economic and business items that can be negotiated. We often find, that many of our clients are unaware of all the terms and conditions that are open to negotiations. While it’s great to have a low rate, if the client has to come out of pocket for a significant amount of the buildout, or waives a fair market free rent period, or is responsible for the HVAC replacement on a retail deal when the HVAC is on its last leg of operating properly, or has no plans in place for expansion/contraction flexibility, or has limiting language in the event of a company sale, that low rate is nothing more than a false comfort in the overall lease. A lease is often for a period of 3 to 10 years – your business can change a lot during that time period and it’s important to ensure the terms you secured in the lease account for it. Below are just a handful of those terms:



Rate (Escalations, Hold Periods)

Rate (Escalations, Hold Periods)

OPEX Caps & Base Year


Free Rent (Full abatement, half abatement, staged)

Construction Period

Tenant Improvement allowance

o   Recapture of unused allowance for reuse in the form of free rent, moving costs, data/cabling, or cash

o   Management Fees

o   Shortfall

Tenant Improvement Allowance

–          When allowance gets paid & to what it contributes to

Term Term
Early access period Landlord Delivery of Premises Language
Expansion Options (Right of First Refusal, Right of First Offer, Must Take) Landlord Maintenance & Tenant Responsibility
Flexibility in Termination Options HVAC cap on tenant liability
Signage Percentage Rent
HVAC; After hour costs Customer Parking / Valet
Sublease/Assignment Sublease / Assignment
Holdover Holdover
Guarantee Language Co-tenancy clause
Security Deposit/Pre Paid Rent Signage (“opening soon”, pylon, window, store front)
Default Exclusives on use
Relocation Rights Renewal Options
Indemnification Guarantee Language
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