When in doubt, bring in a professionalJeff Geoghan
Negotiating a lease in the commercial real estate realm can be a stressful experience if you’re unprepared for it. With the myriad clauses that can find their way into even a “standard” lease agreement, it’s more important than ever to have the document reviewed by a professional.
I sat down with veteran Lancaster County commercial broker and CCIM Christine Sable, president of Sable Commercial Realty, to ask about the leasing process. With the volume of office and retail space coming on the market, a good year is stretching out in 2013.
Christine has a lot of experience with leases of all shapes and sizes.
“Attorney review is something I strongly recommend to my clients” she noted. “It's important to use an attorney with a track record in real estate – someone who reviews 10 or more commercial leases a year will be on top of it.”
This becomes even more pressing when negotiating with larger national chains and companies, which often have complex leases with numerous “escape clauses” that can frustrate landlords.
An example of one clause that often escapes attention on the tenant side is a “holdover provision” – ramped-up lease payments that occur if a tenant happens to overstay a lease even by one month, Sable said.
Then there are CAM (common area maintenance) fees and HVAC maintenance/replacement clauses that can cost the tenant thousands if not properly negotiated.
“It’s important for all parties in a lease to grasp the fact that some extra expenditure upfront on attorney review may save significant sums down the road,” she said.
Consulting other professionals before engaging in a commercial lease is advisable, Sable observed. For example, due diligence is important when looking at the systems in the spaces; hiring a contractor to review the age and condition of the major systems, having an IT pro over to review the wiring/wireless capabilities or even hiring a space planner to lay out a cost-effective, better long term use plan for the spaces all can help tenants make better decisions.
In the end, it’s your own money you’re risking by not bringing in pros to advise you.