Protect your investment on building space. Make sure you have the Tucson office lease or retail lease that gives you the most flexibility and control.
Negotiating for a Tucson office lease or retail lease requires attention to many more issues than cost and length of the contract.
You want to make sure you have the most flexibility possible in using the space you’re leasing. You also want to have some ability to dictate terms that work in your business’s best interest.
Here are some elements of a commercial property lease contract that Commercial Real Estate Group of Tucson often negotiate for our clients. They can affect the way the space is used at any part of the lease.
A tenant considering a Tucson office lease or retail lease that requires a large amount of space will have some leverage to request these terms. I believe these are important issues to discuss with clients to see if they will benefit from bringing them to the negotiating table.
Kick-out clause. This provision gives both the tenant and the landlord the right to end a contract early. It’s often seen in Tucson retail leases when the business is untested. A landlord will use the clause if the business isn’t thriving.
As the tenant, you can negotiate certain times that the kick-out clause goes into effect when it’s to your benefit.
If you’re facing a penalty payment, for instance, you can invoke the clause to pay the penalty and break the lease instead of having to pay for the full term of the contract.
Other clause provisions can make early termination available after a certain amount of time or if certain problems arise. Those problems could include parking issues, loss of an anchor tenant or expansion needs.
Without a kick-out clause, early termination of a contract for any reason will be costly for a tenant. You’ll be responsible for several months of rent. You may have to repay unamortized portions of improvement costs.
Use clause. You want the broadest clause you can get. This gives you flexibility to change products and services as your business dictates.
Exclusivity clause. This term gives you a lot of say about who else has a Tucson office lease or retail lease in the same building or center where you’re located.
A broad exclusivity clause gives you a lot of power to reduce competition within your building.
Also consider limiting the landlord’s ability to lease space to a tenant that could use so much of the parking space that it affects your customers’ access to your business.
Additional space clauses. Having the right of first offer means that the landlord gives you first crack at any space in your building that becomes available.
Right of first refusal gives you the opportunity to match any deal the landlord is willing to sign with a third party for building space.
Relocation clause. Sometimes a landlord will want to move you to a different space in the building where you have a Tucson office lease. Eliminating this clause obligates the landlord to get your approval and provide compensation for such a move.
Lease renewal option. When negotiating options to renew your expired lease, focus on a fixed predetermined price, not a fair-market price. If office space rents go up, you end up paying more.
SNDA. A subordination and non-disturbance agreement is often called a non-disturb and protects you if your landlord goes bankrupt. If control of the building you’re leasing reverts back to the lender, the agreement allows you to keep your lease.
These are hard agreements to get for tenants leasing small amounts of space. But if you can secure one, it could protect you from having to suddenly find a new place.