Understanding Typical Commercial Lease Terms
Choosing the right commercial lease terms isn’t an easy task for a growing company. Warehouse tenants want the peace of mind and concessions that often come with signing long-term leases, but they also want the flexibility of being able to move if the business outgrows the current warehouse space. As a result, business owners need to consider both current and future needs when negotiating lease terms.
But what are the typical commercial lease terms to expect at the start of a negotiation? And what factors should a tenant consider when it comes to the length of the lease? This guide will help tenants understand typical commercial lease terms in order to negotiate a lease that works well for their company.
Typical Commercial Lease Terms
Factors To Consider in Commercial Lease Terms
Is the business new, or does it have years of operation under its belt? This is important because if the business is a startup that isn’t yet stable or producing consistent income, then a longer lease is risky for both the landlord and the tenant.
Some warehouse locations offer great convenience and access to resources, whereas others are located in less ideal locations. There’s higher demand for warehouses in enviable locations, so these tend to be leased for longer periods.
Tenants who get the most concessions from their landlords are usually those who sign longer leases. Such concessions can include anything from free rent to rights of first refusal or improvement allowances.
Landlords don’t want to worry about finding tenants. So if a tenant is willing to agree to longer commercial lease terms, a landlord is usually more willing to reduce the rent. Conversely, if a tenant only needs space for a short length of time, there will likely be a higher monthly rent for the convenience.