Negotiating Your Business Lease | Palo Alto and Menlo Park Real Estate Attorneys

Unless you own the building where your business is, you will need to lease space, probably on a long-term basis.  A lot of business owners are presented with a preprinted form by the landlord and told to sign—and many just sign the form “as is.”

Unlike renting an apartment or house for your residence, the terms of a commercial lease can vary widely (that’s why most residential leases are one or two pages long, while commercial leases can run dozens of pages).  But that also means that, in many cases, there is a lot of room to negotiate.

If you absolutely need to locate in a particular space and there is a very high demand for it, you may not have much ability to negotiate the terms.  At a minimum, however, you need to understand the terms so that you can operate accordingly and make a fully informed decision.

The following are some provisions of a lease to which you should pay particular attention:

1. Authorized Use: The landlord will specify what type of business you may operate at the site.  Make sure this description is not too restrictive.

2. Term of Occupancy: The best lease term for you will depend on the status of your business and your plans for the future.  Commercial lease lengths can run anywhere from monthly to decades-long, and it’s important to be sure that you are protected both against an excessive term you won’t use and against having to move when you don’t want to.

3. Rent: “Rent” is more complicated than the price per square foot.  You need to determine whether the rent quoted is “fully loaded” or “triple-net.”  The lease may also require you to pay charges in addition to the base rent.

4. Evening and Weekend Use: Some buildings are automatically set to turn the heat/air conditioning off on Friday afternoon and turn it on Monday morning.  If you work evenings or weekends, you want to be able to individually activate the heat/air conditioning.

In a later post, we’ll discuss more lease provisions to consider.

If you are considering a lease for your business, please contact our office.