Part 3 – the Process

The selection and acquisition of a 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. To reach the best deal, and to prevent costly disputes, it is crucial to negotiate a favorable and highly detailed agreement. Understanding all of the lease details will allow you to negotiate effectively and creatively, and will also keep you from being surprised by unfavorable or unfamiliar terms.

The process basically consists of site selection, business terms negotiation and document negotiation and drafting. To be successful, each component of the lease must be identified, analyzed, prioritized and negotiated. Also, the timing required to complete the lease transaction should not be overlooked. Ample time should be allowed and the participants should not permit themselves to be rushed through the process in the pursuit of unnecessary or arbitrary deadlines. Decision-makers and participants in the leasing process should be consulted early to determine the amount of time required for each step and a timeline should be considered allowing an orderly selection, negotiation and documentation process.

Identification of all business and legal needs, and subsequent prioritization of such needs, should occur at the very beginning to avoid losing sight of the most important issues. Identification is facilitated by each side asking itself a number of questions relating to their respective needs and attaching a level of importance and priority to such needs. A list of questions a tenant might ask is provided in the table below [See Table 1 – I will post this soon], however each party should consult qualified professionals to help ask the right questions and develop an understanding of their own business and legal needs.