Monthly Archives: January 2012
Rent: Just One Side of a Commercial Lease Agreement
My blogs for the next week or so will contain excerpts from an article I co-wrote for the ACC Docket, November 2010 edition, titled “Rent: Just One Side of a Commercial Lease Agreement.” The discussion contained in the article was written for corporate lawyers, but applies to a much wider audience as it describes the importance of careful planning and analysis throughout the leasing process, and also emphasizes the need for the tenant to focus on each provision contained in the definitive lease agreement. A successful lease negotiation focuses on more than just the base rental amount, as vital components of reducing a company’s occupancy costs include mitigating risks and exposure to unforeseen expenses, maximizing flexibility and operating efficiencies, and aligning the company’s real estate strategy with its overall business plan.
I hope these postings will be enjoyable to read and informative. Feel free to call or email, and we’ll show you why we’re Studley!
How well does your lease protect you?
The selection and acquisition of facility for a company’s business is one of its most important decisions it will make, and it can mean the difference between profitability and failure. Commercial leases are made for the long-term, and the payments made under a lease often represent a significant portion of the business’ expenses. The total financial burden of rent, costs of tenant improvements and other lease charges can significantly impact the overall success or failure of a business.
The focus of lease negotiations by a tenant is often limited to rent, concessions and other economic considerations. As a result, many important issues are often overlooked, misunderstood or under-negotiated (even by sophisticated tenants) that could materially affect the long-term success of the deal and the company. Negotiating the best possible deal is done throughout the entire leasing process, from the initial decision to move forward through lease execution. To reach the best deal, and to prevent costly disputes or unforeseen expense, it is crucial to negotiate a favorable and highly detailed agreement.
This really speaks to the heart of a serious problem. On-the-job training has traditionally been the primary path to knowledge by brokers when it comes to leasing, and as a result, you could spend years of expensive trial and error and still never attain competency. Did your tenant rep professional help protect you throughout the lease negotiation process, or were your left to fend for yourself once the base rental amount was agreed upon? Was your broker willing to fight for you when negotiating lease provisions with the landlord? Did your broker bring years of legal training and lease negotiation experience on behalf ot the tenant to your transaction, and take ownership of the terms and conditions of the lease agreement?
How well does your lease protect you? Are you confident that you’ve negotiated a favorable lease? Let us protect your company from unpleasant problems, it’s not just about rent when it comes to negotiating a good lease deal. You can better serve your company’s interests by mitigating the risks concerning your corporate occupancy, to negotiate the best possible deal in the marketplace. We’d be happy to show you why we’re Studley!
Will Smith video on Success
I really liked this video and wanted to share it with others. I hope you enjoy this as much as I did!
Negotiating the lease deal
It is amazing how often companies find themselves looking for guidance because an unpleasant surprise has come up during the term of their lease, with the vast majority of such issues costing them significant dollars (that wasn’t included in their budgets) in attorneys’ fees and costs to remedy the situation. Often such surprises are due to having signed a poorly understood or poorly constructed lease agreement and could have easily been avoided. This is especially true of smaller, less sophisticated tenants who, for whatever reason, sign the landlord’s “Standard Form Lease” with few, if any, changes.
A lease is much like a partnership agreement in that it governs a business relationship that could last for many years. When everything goes as planned, most leases will serve the parties well but the true test occurs when there are hiccups in the relationship. If the lease has not been carefully drafted, a hiccup can become a major problem. Tenants often lose sight of the fact that the “Standard Form Lease” represents the landlord’s wish list, and if not appropriately modified, will likely not serve their interests when issues arise.
Most tenant rep firms do not fully protect their clients throughout the entire leasing process, as achieving a favorable deal includes the careful negotiation of the definitive lease agreement. This is where our Studley team differs from the rest. We’d be happy to show you why we’re Studley!
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