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What provisions should a commercial real estate lease include?

On Behalf of | Oct 11, 2021 | Commercial Real Estate |

Often, when a contract dispute arises over a commercial lease, the resolution depends on the details included in the lease agreement itself. What details should both owner and renter of a commercial property carefully consider when negotiating a lease?

What costs, including rent, must the tenant pay?

While rent for a commercial property is often the focus of negotiations, it is also important to consider additional costs related to the property. What will be the amount of the security deposit, and under what terms will it be returned once the lease has concluded? How will the owner calculate increases to the rent? What additional costs may the renter pay for maintenance of common areas like parking lots or restroom facilities?

How will building and improvements be handled?

Over time, spaces may need updates to better serve the businesses located there. Lighting, reworked floor plans and other improvements can boost business, but they are also costly. Are commercial property owners partially responsible for the costs of improvements to a building? Will leaseholders address these costs themselves?

How are tenants allowed to use the space?

Whether a commercial leaseholder wants to sell a specific product or utilize a space as their primary office location, the contract should detail what type of business the landlord allows in the space. This provision may also detail how tenants can utilize common areas like hallways between storefronts.

Are tenants allowed to sublease the space?

Things may change before a lease has concluded. A tenant may find that their business has grown, or they may need to close their doors and move on to new opportunities. Is the tenant allowed to sublease the location to another company for the remainder of the lease? Under what conditions can they sublease the property, and what information must they provide to the landlord if this occurs?

When negotiating these and other provisions in a commercial lease agreement, it can be particularly important for landlords and leaseholders alike to consult with an experienced attorney. Phillips & Mille can review the contract and help negotiate an agreement that helps the client achieve their business goals.