Coming to an agreement on a commercial real estate lease

When an Illinois business finds a location for its base of operations, it may be a rental property. In that case, it will be necessary to negotiate a commercial real estate lease. The ability to obtain concessions from a prospective landlord mostly depends on the property's location and how active the commercial rental market is at the time. The two most important parts of any commercial lease are the rental amount and the length of the lease.

If the market allows it, the rental amount may be up for negotiation. The amount of rent is normally calculated by multiplying a certain amount by the square footage of the space. That number is then divided into 12 monthly payments, and may include upkeep for any common areas. Whether the tenant pays for items such as insurance, taxes, utilities and repairs may be negotiable as well. Lease agreements will often include an annual increase.

Such an increase could depend on the length of the lease. A tenant that is willing to sign a long-term lease may be able to obtain concessions that would otherwise not be given. This is because the landlord is guaranteed an income from the space for a long period of time, and will not incur the costs associated with searching for a new tenant. If a long-term lease is not feasible, it may be possible to sign a shorter lease with the option to renew the lease, so long as the request is made within a certain period.

Other provisions can be added to a commercial real estate lease as well. The landlord may need to approve any improvements to the property, how the property is used and whether the lease can be assigned or sublet. This is a simplistic outline of a commercial lease, and it is recommended that any Illinois business understand that this article should not be considered a substitute for legal advice.

Source: FindLaw, "Negotiating a Lease for Commercial Real Estate", , Aug. 25, 2014

Source: FindLaw, "Negotiating a Lease for Commercial Real Estate", , Aug. 25, 2014

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