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Tips for negotiating a commercial real estate lease

Many Alaska residents have likely entered residential leases with landlords before. A residential lease is very different from a commercial lease.

When you rent a home from a landlord, you typically have little to no say in the terms of the lease. This is different when you are renting commercial real estate.

You have a say in the terms of a commercial lease

Commercial real estate lease transactions typically take longer and involve more negotiation. One reason for this is that commercial leases tend to be longer in length than residential leases.

If you are opening a business, you probably plan to stay there for a long time. This is another reason why you will need to negotiate the terms for your commercial lease. You do not want to be stuck in a lease with unfavorable terms for several years.

First, be sure to keep everything in writing, including the initial offer. If a commercial landlord gives you an offer for lease terms, ask to see it in writing. If they hesitate, this could be a red flag.

The counteroffer letter

When you receive a written offer, prepare a written counteroffer. In addition to listing the terms you disagree with and your new proposed terms, you can submit a letter to go with the counteroffer explaining why you would be a good tenant.

This is your chance to tell the landlord why they should rent to you. The letter is also a chance to tell the landlord about your business.

Prepare for negotiations to take time. Meeting with a landlord and signing a residential lease is usually done in a day, sometimes an hour.

How much time should negotiations take?

Negotiating a commercial lease can take several days or weeks. Prepare yourself to be patient. However, if several days have gone by with no word from the landlord, follow-up.

There are many different terms that are negotiated in commercial leases aside from the rent. As a commercial tenant, you may have more responsibilities than a residential tenant when it comes to maintaining the property. Whatever you decide, be sure the lease terms are clear about who pays for what.