Analyzing a Commercial Real Estate Lease

I am often amazed by the number of landlords and tenants who find themselves looking for guidance after an unpleasant experience that has cropped up from a real estate lease. Often however, these surprises are as a result of a poorly understood or constructed lease agreement. Commercial real estate for lease however need not end up with such bad experiences. When landlords and tenants take the time to understand the terms and conditions of a lease agreement, they will often avoid the potential heartache.

The parameters set out in a lease agreement essentially lay the foundation for a business relationship. Thus a lack of understanding of these rules and regulations is much like entering a partnership agreement and not being aware what it entails. On the other hand, a lease that is not carefully drafted can become a major problem should an unpleasant situation arise. Commercial real estate for lease should thus have more than just the Standard Form Lease agreement issued by the landlords since these represent only the landlords wish. On the other hand, any changes to the lease requested by the tenant should be clearly understood so that they do not cause difficulties for the landlord in the future.

A commercial real estate for lease should first evaluate the tenants own needs. Some of the key components that such a lease should take into consideration include the space requirements, the market and construction requirements if permitted. Analyze the needs of the client will require an awareness of the proposed location, the amenities available and the staffing projections. To help coordinate all of this, it might be necessary to establish a project team that would include the tenant, the landlord and probably a commercial real estate broker. Complex requirements will likely require a greater number of participants. Before initiating a commercial real estate for lease market survey, the tenant will need to pre-determine the square footage requirement in detail. This evaluation will also help in determining the space components that will be required.

Once all the tenant needs have been determined, a tour of candidate buildings can then be made and a building comparison made on how favorable each building compares with the tenants needs. Commercial real estate lease also require that a tenant write a Request For Proposal. This serves the same capacity for a tenant as a Standard Form Lease does to a landlord. When landlords and tenants are aware of the issues to be evaluated in a lease agreement, both parties can avoid a bad experience in the future.