As a commercial tenant, you want to have some flexibility in your lease terms, especially in uncertain times. But how can you negotiate with your landlord to achieve that? Here are some tips on how to make sure your lease provisions are flexible and suit your business needs.
One of the most important aspects of a flexible lease is the rent amount and how it can change over time. You may want to avoid fixed increases or market-based reviews that could make your rent too high or unpredictable. Instead, you could opt for rent adjustments based on certain triggers, such as your revenue, occupancy, or performance. You could also ask for rent abatements, deferrals, or discounts in case of emergencies, disruptions, or force majeure events.
You could negotiate for one month of gross free rent per year of lease term and keep annual increases to 2.5% or less. Waive security deposits and personal guarantees.
In my experience fixed rent reviews provide certainty; CPI also provide certainty but the recent jump in CPI was a shock for some tenants to used to low CPI rates; market adjustments in Australia often occur on exercise of an option but if the initial term was lengthy they could occur during the term - caps and collars should be considered. Rent free periods are usually at commencement of the initial term. Rent deferrals occur usually in the event of damage whilst landlords are reluctant to document rent abatements in the event of force majeure.
Die Wertsicherung der Miete ist für den Vermieter unabdingbar. Gleichzeitig will sie der Mieter so gering wie m?glich halten. Basis bildet in der Regel ein Verbraucherpreisindex. Es existiert kein eigener Mietpreisindex. Um beide Interessen bestm?glich unter einen Hut zu bekommen, wird in drei Dimensionen verhandelt: Schwankung: üblich sind unberücksichtigte Schwankungen des Indexes von bis zu +-5%. Bei Grundstückspachten findet man vor allem in ?lteren Vertr?gen gelegentlich auch h?here Schwankungstoleranzen. Anpassungsh?he: wenn die Schwankung überschritten wurde, wird die Differenz zu bspw. 80% aufgeschlagen. Deckelung/Cap: aufgrund jüngster Inflationssprünge wird vermehrt wieder gedeckelt; bspw. bei 5% max. Erh?hung p.a.
? Negotiation ? Clauses for Modification ? Early Termination Options ? Subleasing Rights ? Rent Adjustment Mechanisms ? Force Majeure Clause
From the Landlord's perspective, you could opt for rental increases to have a minimum and maximum based upon CPI (for example, a minimum of 3% and maximum of 5% dependent upon CPI.) However, I have always personally preferred the certainty of fixed annual increases (or fixed increases every 5 years) as opposed to using CPI. All of the other rent adjustments such as those based upon sales, co-tenancy, etc. are tenant based adjustments which for national retailers & restaurants are the norm. However, for mom & pop or smaller regional players, those might be harder to be able to negotiate into the lease.
Another way to make your lease flexible is to negotiate the term and renewal options. You may not want to commit to a long-term lease that could limit your growth or relocation possibilities. You could seek a shorter initial term with multiple renewal options that give you the right to extend or terminate the lease at your discretion. You could also ask for a clause that allows you to sublease or assign the lease to another tenant if you need to exit the premises.
Im Retail sind in ?sterreich bspw. 3, 5 oder 10 Jahre fixe Erstlaufzeit/Kündigungsverzicht des Mieters üblich. Anschlie?end werden gerne einseitige Optionsrechte für den Mieter angeh?ngt. Hier ist in ?sterreich speziell die Mietvertragsvergebührung zu bedenken, da die Abgaben sehr kostspielig werden k?nnen, je l?nger die Laufzeiten vereinbart werden. Nicht selten wird daher auch über die Kostenteilung der Gebühren verhandelt. Der Vermieter wird in seinem Interesse immer versuchen die Entscheidungshoheit über Untervermietung und Weitergabe eines Vertrages zu behalten. In der Regel gibt es dazu kaum Verhandlungsbereitschaft.
For certain projects, such as greenfield projects, it may be useful to have a development term during which the rent is lower and during which time termination is more flexible. The developer can use the more flexible termination provisions to its advantage if the project has to be re-scoped or shelved.
Por una parte a una empresa que alquila una “ubicación concreta” le interesa poder extender su contrato y no ver limitado su alquiler por un plazo corto. Es decir imaginemos que montamos un comercio en un local comercial y nos va muy bien. En ese caso nos interesa tener controlado una duración de contrato extensa para no vernos afectados por subidas de rentas a la finalización del contrato. También hay que entender que al propietario de un local, cuanto más compromiso demuestre el inquilino mejores condiciones de renta podrá dar. Y si no hay ese compromiso las condiciones de ese alquiler se endurecerán y la renta seguramente sea más elevada que si pactamos mayor duración de la obligación de permanencia etc
Term is your friend. Often, the primary lease term will be matched with an option to extend. By example, a five year lease will often have an option to renew for 5 years. Consider signing a 10 year lease, to ensure up to 20 years of control.
It’s always preferred for a Lease agreement to retain clauses for both tenants and landlord. This way both parties can reserve their right.
You may also want to have some flexibility in how you use and modify the leased space. You may need to expand, contract, or reconfigure the space according to your business needs and preferences. You could request a clause that gives you the right to alter the premises with the landlord's consent, which should not be unreasonably withheld or delayed. You could also ask for a clause that permits you to use the space for a broad range of purposes, as long as they comply with the zoning and building regulations.
Este tipo de actuaciones deben de ser pactadas y reflejadas en el contrato de alquiler de forma detallada y documentada para evitar conflictos a la hora de finalizar el contrato de alquiler. Si se realiza una inversión en obras de mejora o adecuación se pueden pactar rebajas en el alquiler o carencias sin pagar etc A mis clientes siempre recomiendo realizar un informe del estado actual de la finca antes de ocuparla por parte del inquilino. Una verificación de que realmente se realicen las obras pactadas en contrato y a la salida “finalización de contrato” en el momento de entrega de llaves la presencia de un perito experto como yo para certificar todo el proceso.
In my experience, tenants should check their escalation clauses. The longer the rental term the more flexible the landlord is likely to be regarding escalation.
Another factor that could affect your flexibility is the responsibility for maintenance and repairs of the leased premises. You may want to avoid taking on too much liability or cost for the upkeep of the property. You could negotiate a clause that specifies the landlord's obligations to maintain and repair the structural and mechanical elements of the building, as well as the common areas and services. You could also ask for a clause that limits your obligations to minor repairs and maintenance of the interior and fixtures.
List as many specific alternative remedies as possible, in lieu of default, that either party may elect to do in the event that the non-performance of a lease obligation occurs.
Estoy de acuerdo, es de vital importancia reflejar de forma detallada en el contrato las responsabilidades y obligaciones de cada parte. Tanto a nivel de obras de reparación, trabajos de mantenimiento, como en el pago de impuestos y seguros obligatorios. Los seguros de da?os, responsabilidad civil etc. son de vital importancia y dan una gran tranquilidad a ambas partes en caso de siniestros.
Finally, you may want to have some flexibility in how you resolve any disputes that may arise with your landlord during the lease term. You may not want to resort to litigation, which could be costly, time-consuming, and damaging to your relationship. You could opt for a clause that requires you to use alternative dispute resolution methods, such as mediation or arbitration, before going to court. You could also ask for a clause that allows you to terminate the lease or seek damages if the landlord breaches the lease or fails to perform its obligations.
Alternative dispute resolution should always be specified as a first approach prior to litigation which tends to be more expensive and time consuming.
Puede optarse por reflejar en contrato fórmulas de resolución / mediación de conflictos mediante peritajes externos. Este servicio es muy habitual en alquiler de fincas singulares.
Learn all you can about the business of your tenant. Know what drives the value of their business. Ask what lease terms are most important to them. Draft the lease according…
- Is to ensure flexibility in lease provisions, consider including clauses for early termination, subleasing, rent adjustments based on market conditions, and options for space expansion or contraction. Additionally, negotiate terms that allow for modifications or amendments to the lease agreement under certain circumstances. Consulting with a legal expert specializing in real estate can also help tailor provisions to meet your specific needs while maintaining flexibility.