What may a business negotiate when signing a commercial lease?

On Behalf of | May 17, 2022 | Real Estate

Before signing commercial lease agreements, Indiana business owners may discuss tenancy options with a potential landlord. Forbes notes that a commercial lease could last between three and ten years; a contract may also lock in the monthly rental amount for its duration.

Because a physical space allows you to service customers, certain favorable terms could make a difference in how you grow and manage your business. Signing a lease that lacks flexibility, however, may have a crippling effect when faced with unexpected events.

Short-term leases may help during economic changes

Business owners could run into problems by signing long-term lease agreements. If you face unexpected difficulties selling your products or services, a long-term binding contract may not help. Startups or companies that change with the economy may fare better with a landlord offering short-term agreements.

Shorter terms may include an increase in rent with each renewal period, but renewing a lease sooner than later could offer a tenant a needed exit. Growing businesses may need to find a larger space or relocate. When a short-term lease ends, a landlord also has an opportunity to upgrade the property and attract higher rental amounts.

A business may consider sharing a rental unit

A business owner may consider subleasing or sharing unused commercial space to help with cash flow and meeting monthly expenses. As noted by Inc.com, tenants may need to obtain their landlords’ approval before sharing their units or subleasing.

Businesses hoping to share their space may need to negotiate new lease conditions. The involved parties may all need to agree on items such as where they may post signs and how they could modify the space to accommodate more than one enterprise.

A commercial lease agreement could make a difference in businesses achieving their short- and long-term goals. Flexible lease terms may provide more workable options to do so.