Commercial lease agreements are generally years-long agreements. Committing to one means agreeing to its provisions for several years (some as many as 10 years), so you want to be sure the terms are favorable.
The good news is that commercial lease agreements are negotiable. If you’re preparing to sign a commercial lease, arm yourself with an experienced real estate attorney and get to work reviewing (and negotiating) these important provisions.
- Lease structure – There are several types of commercial lease structures in Florida with a triple net (NNN) lease being one of the most common. Before signing a commercial lease, understand which expenses you’ll be responsible for and identify where there’s room for negotiation.
- Tenant improvement allowance – Does the landlord offer any incentives for improving or modifying the property? A tenant improvement allowance is money given by the landlord to a commercial tenant to help offset the costs of a renovation or improvements to the leased property. Improvement allowances are generally fixed-figure amounts that do not need to be repaid and are calculated based on a property’s square footage, although there are restrictions to how the money can be spent.
- Sublease clause – Review the lease to see if there are any subletting restrictions or if you are able to sublease the property to another party during your tenure in the property.
- Exclusivity clause – This can be particularly important for retail locations but also may affect other industries. A tenant should consider negotiating exclusivity – that means restricting a landlord’s right to lease nearby spaces to businesses similar to yours.
- Rent escalation clause – The escalation clause stipulates rent increases over a specified period of time. These may be fixed or fluid relative to outside factors, such as if there were to be an increase in the consumer price index or some other measure. Understanding how much rent will increase during the term of your lease is imperative for financial planning. Even small annual increases can impact your overall tenancy costs.
These and many other provisions of a Florida commercial lease agreement are up for negotiation. Before signing any commercial lease agreement, give us a call at the Law Offices of Alex D. Sirulnik, P.A. We will help you review and negotiate a strong and favorable lease agreement for your Florida business.