Addressing Significant Issues in a Lease-Clause Analysis

It is a basic fact today that almost every business enterprise will enter into some form of commercial real estate leasing agreement every couple of years. At first blush, it may seem as if leasing commercial real estate is fairly straight forward with no complicated transactions. However, since commercial real estate leasing is a process, it is important that all parties involved have real estate knowledge if the lease agreement is to be successful. Due to the complications in our society today and the many situations that can arise, a lease agreement should satisfactorily protect the interests of all parties involved, both the landlord and the tenant.

In order to provide superior tenant services, many landlords have seen the importance of understanding and negotiating for a simple commercial real estate lease. As a result, insisting on the fact that tenants sign the Standard lease does little to protect the interests of both parties. On the other hand, signing a poorly understood or constructed lease agreement for the tenant can result in unpleasant surprises should such a situation arise. By the same token, even inexperienced landlords will often embrace a lease agreement that they do not fully understand and thus impose upon themselves terms and conditions they may not fully have understood.

A lease is much like a partnership and hence commercial real estate leasing sets out parameters of a business relationship. A carefully drafted lease will thus offer both parties benefits and protection should unforeseen difficulties arise. While the potential for adversity is diverse, commercial real estate leasing agreements are generally and primarily focused on issues of base rent and concessions. This however should not be the case. There are a host of other important concerns that are often overlooked and under-negotiated in a lease agreement that can cause serious problems in the unforeseen future.

The core concepts of a successful negotiation require that both parties have knowledge with regard to the significant issues involved. The process of the lease evaluation often starts with a tenants own needs. When landlords are more involved with understanding the process from the tenants perspective, they in fact ultimately end up saving money, time and effort. Over the years, landlords and tenants have become knowledgeable over commercial real estate leasing, but often at a cost of a bad experience. However, when both parties are aware of how to evaluate the issues involved, even on a cursory level, lease negotiations can be a pleasant and a successful experience and can help avoid a future bruising.