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Lease negotiations for commercial rental properties

On Behalf of | Jan 16, 2020 | Real Estate Law

Commercial property can seem like an exciting investment for individuals and companies in New York. However, once people enter the commercial real estate market, they often need to manage the companies or hire someone else to do it for them. Given the desire to protect their profits, many investors may want to plunge into the process of running their real estate investments directly. When it comes to commercial properties, this generally means leasing them out to businesses for office space, warehouses, retail and other commercial uses.

While residential leases may be fairly standard, commercial leases may vary widely. It is generally expected by the businesses on both ends that the process of developing a commercial lease will be a negotiation. These leases typically run for longer periods of time than standard one-year residential rental contracts, so businesses may be living with the results of their commercial lease negotiations for some time to come. The context of these negotiations can change depending on the state of the property market. If there is a great deal of commercial availability, business tenants may be able to request greater concessions from property owners. On the other hand, tight markets may lead to competition to secure a coveted business space.

Property owners should consider the costs involved in running their business before they finalize a lease. Commercial real estate is generally priced for rent by square foot over the course of the year. This annual cost is divided by 12 to produce a monthly rental fee. There may be additional charges for overhead and maintenance of common areas.

Leases can vary widely in terms of responsibility for utilities, repairs, taxes and other expenses associated with a commercial property. A real estate attorney may guide investors in negotiating a successful commercial lease that helps them enjoy a profitable outcome.