If you’re looking to obtain business premises, there are many things that you need to know to strengthen your negotiating position. Essentially, landlords are like any business - they’re in it to make money, so you can’t expect them to do you any favours when talking about your commercial lease. Unless you own your own business property, you’re going to need to enter into a commercial lease agreement and here we give you a brief overview of how you should approach the negotiation so that you get the best possible deal for your business.
What Is a Commercial Lease?
Essentially, a commercial lease is a document that exists between the landlord (a.k.a the Lessor) and the tenant (a.k.a the Lessee) that details the rights and obligations of each party. Under the umbrella term, there are different types that apply in different circumstances.
They are:
- Standard commercial lease - for non-retail enterprises
- Retail lease
- Licences - for short-term property occupation
- Assignments & Subleases - for tenants to sublease
Depending on the nature of your business, you’ll be choosing the most applicable and each Australian state will have its own legislation that covers each one. So, it’s important that you adhere to the specific rules that exist in your state, particularly as it will determine not just how the lease is made up, but also what needs to be done before the lease is officially entered into.
Your Right to Negotiate
The amount of wiggle room there is in your commercial lease negotiation will depend on how highly sought-after the property is and what the prevailing market conditions are like. However, there is usually some room for manoeuvre, so you should aim for at least some of the following:
- An initial rent-free period - if the property market is perhaps a little flat, your landlord may be anxious to get occupants in to avoid needing to pay business rates, which may allow you to request an initial rent-free period. This is ideal for new companies, as it gives them more time to reach a profitable state.
- Try & Include a Break Clause - another element you could ask to include might be something like a break clause that allows you to exit your commercial lease agreement early. Rather than being totally committed to say, a 5-year lease, you might be able to request the flexibility of being able to end the arrangement on each anniversary with an agreed notice period.
- Repair & maintenance obligations - then there’s something else that can save you a lot of money in the long run - your maintenance and repair obligations. You could perhaps request that you’re only responsible for the building’s interior or if that’s not possible, you could ask for a Schedule of Condition to limit your exposure or for works to be carried out before your commercial lease begins.
Effective, Affordable Online Training for Business Success
As you can see, understanding what you’re doing from minute one can help you save a lot of money over the course of your lease and it can have a significant bearing on the success of your venture. The great news is that you can learn everything you need to know with a cost-effective training course with OCA. Our Commercial and Retail Leasing course covers everything you need to know about commercial lease agreements and the art of negotiation and with everything being delivered online it offers the flexibility of being able to learn when you have the time to. What’s more, the CPD-Endorsed content has been created with the help of industry leaders and dedicated support is on offer 7 days a week!
If you’d like to know more about this or our full range of courses across a wide range of sectors, visit us online at www.onlinecoursesaustralia.edu.au. Alternatively, if you would like to speak to us directly prior to enrolment, call us on 1300 611 404 and we’ll do everything we can to help.
