Whether you are looking to embark on your first lease of a commercial building for your business, are taking on more space or relocating, it is important to ensure you get a fair deal.


Often business owners are in the hands of the letting agent, but it is worth remembering that they are working on behalf of the landlord, not you, agents are responsible for marketing and selling the property to get the best deal for their client.


Our Commercial Property Team at Lamb Brooks share some insights on negotiation and stress the importance of getting what you need out of your commercial property deals.


It Isn’t All About Price


When thinking about what a ‘good deal’ is, many people will jump to the idea of getting a low rent or a great deal on cost per square foot. Price is not the only factor when it comes to getting a deal that you are happy with. It is more important to focus on what is ‘good’ for your business.


Other Negotiations to Make


Agreeing a cost reduction per square foot is fantastic, but there are many other, often more important matters that can form part of your negotiations which can form a long-lasting impact on your business.


It is critical to get your Heads of Terms right before starting your lease, as it can be difficult (if not impossible) to change once you have agreed and commenced your tenancy.


Some other areas to consider in your negotiations include:

  • Rent free period(s)
  • Break clauses
  • Length of lease
  • Repair obligations
  • Deposit size / amount of month’s rent up front
  • Paying landlords costs (these are sometimes put into agreements)
  • The Landlord & Tenant Act 1954 security of tenure provisions
  • Dates and basis of rent review(s)
  • Assignment and underletting

Think outside of the box. If you have exhausted your negotiations on some of the more typical areas of debate, think about what else your commercial landlord might be able to assist with. Perhaps there is scope to negotiate some repairs or fixtures before you move in? More parking spaces? Wi-Fi or other utilities to be included?


Do Your Research


To place you in a stronger position to negotiate and secure yourself the commercial property that you want, it is crucial to do your research. Understand the market, see similar properties and make comparisons, check for local planning and developments, business rates, learn as much as you can about the landlord and their position, speak to other businesses operating in the area or leasing from the same landlord / local authority. Knowledge is power.


Commercial property empty shop premises to let negotiating business lease property solicitor

Understand Your Priorities


Before you can be sure that you are negotiating the best deal for your business, you must be clear about what your priorities are. Make sure you have considered your business plan as well as your long- and short-term objectives.


Think carefully about what type of premises you need for your business. If this is the first time you are renting a commercial space, it can be easy to get excited and eager to put offers in without ensuring that the space is right for you. You don’t want to bite off more than you can chew or end up needing to move and incur further costs because the building or location isn’t quite right.


If you are moving – what are your reasons for moving? Does the new premises tick all the boxes you need to justify the expense and upheaval of moving to a new business location?


It might be helpful to write a list of your commercial property ‘must haves’ and a separate list of additional extras or non-essential aspects that would be adventitious.


In terms of your lease agreement, think carefully about what terms would hinder your business and what would work best for you. Is flexibility an essential part of your business plan? Or perhaps you are looking for longevity of your lease to provide some security.


Getting The Right Premises


It is no good securing a great deal on low-cost rent or fantastic terms if your premises is not up to scratch. Consider all aspects of the property.

  • Is the location right for your business?
  • How accessible is the location?
  • Is the building the right size for you now and in the long-term future?
  • Is the building already fit for purpose?
  • How costly will the fit-out be?
  • Do you need planning permission to make the necessary changes?

A chartered surveyor can also help you to identify any issues with the premises which you can use in the negotiation process.


Entering Negotiations


As a business owner, having good knowledge about negotiation tactics in business is key. Address your premises negotiations as you would other deals and negotiations.


Negotiating a favourable lease will help your business to succeed so it is important not to bow down and accept the terms produced without carefully reading and understanding your obligations.


Remember that when you are presented with the commercial lease, that the terms will be heavily weighted in favour of the landlord, and they will expect you to negotiate.


Don’t put all your eggs in one basket. Negotiating on more than one location at the same time can strengthen your bargaining power, give you more comparisons to draw on and provide you will fall back options.


Understand the tactics that your landlord or the landlord’s agent will be using when liaising with and how to respond to them effectively. They may use counter offers, a ‘take it or leave it’ approach or apply pressure with the threat of other offers.


Hiring an independent professional to find your premises and negotiate terms on your behalf can help in numerous ways.

  • It can save you time and stress to allow you to focus on running your business
  • They have expertise in the commercial property market and understand the processes inside-out
  • They are less emotionally involved allowing them to apply logic and reason
  • They are experienced and skilled in negotiations
  • A well negotiated and prepared Heads of Terms will help to reduce your legal costs

Expert Commercial Property Legal Services


If you are ready to progress with a new lease or need some legal advice on a commercial property matter, then please get in touch with our team today.


Our Commercial Property experts deal with a wide range of matters relating to business property for all sectors across the UK.


Call us on 01256 844888, email enquiries@lambbrooks.com or alternatively, leave your details with our live chat assistant (who is a real person, not a robot) to receive a call back from a solicitor.


Other Articles You May Be Interested in Reading:

Death of the Office? Not Just Yet

The Cost of Renting a Commercial Property

Heads of Terms: Some Points for Would-Be Tenants


The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.