Commercial Lease Negotiation Tips

I've had one PM say that commercial (retail leases) were too hard as they couldn't calculate a CPI rent review - other than that, all the other PMs wouldn't touch residential (even their own).

 

Trying to keep it simple, is it possible to have a all inclusive PCM rate only? in a 12 month lease agreement... No security deposit or bank guarantee just a simple bond of say 2 months.

The particular place we would like is desperate and has advertised in capital letters “HUGE INCENTIVES OFFERED”

The area has a lot of vacancies and is off the beaten track.

 

By "all inclusive PCM rate" I assume you are referring to a gross lease, whereby you pay one rent to the landlord, and from that rent they have to deduct outgoings (taxes, rates, etc). If that's the case then yes absolutely you can, subject to them agreeing. Landlords prefer net leases because then all other expenses fall on the tenant, AND the property is generally valued on the capitalised NET rental income.

The rest of the items re BG's, deposit etc are all part of the negotiation, but a "simple bond of say 2 months" is essentially a 2 month security deposit. So if you want the place, offer $XXX pa GROSS rent, with a security deposit or BG equivalent to 2 months gross rent, and see how you go. Term would be 12 months + any options you might like (can't hurt to have 1-2 x 12 month options in case things go well).

 

Security deposit/bank guarantee/bond are essentially the same thing - money you hand to the landlord and should get back if you don't fail to meet your lease obligations.

 

Having worked for one of the nation's largest commercial landlords, I wouldn't recommend you (or anybody) sign a commercial lease without having your own lawyer check it out first, especially when you don't have the protection of retail tenancies legislation (which you won't). The landlord has almost certainly had a lawyer prepare their lease, and there are frequently clauses in them that may look innocuous to a layperson that a lawyer would suggest you negotiate out. When that clause comes back to bite you in a year or two is too late to realise that you signed a lease that is entirely in the landlord's favour.

 

Have you found out what the huge incentives offered are? They might end up making the lease more attractive and therefore you'd be happy to go with a nett lease.
What have they offered you so far and what have you offered them?
You can offer gross but it's not common. Doesn't mean you can't ask of course. A 2mth bond is pretty much what you have outlined so there is no difference there.

 

1k PCM + OG for 6months is whats advertised. 249sqm light industrial. Use to fetch 2k in boom times. The agent is playing coy with the details at the moment. Even though the advert clearly states "call for all the details" smh.

 

I'm not sure where you're upto in the negotiations but to be fair to the agent/landlord the amount of incentives offered usually depends heavily on the lease terms offered, ie start date & lease term not to mention the who the tenant is.

To answer your previous question, the beauty with commercial leasing is anything is possible if both parties agree so a simple lease with fixed monthly rent is easily done...but not easily agreed.

 

Haha...doesn't mean a thing other than the agent is trying to make the phone ring. I see it all the time.

 

No surprises there. Agents doin there thing i guess

 

Update: Suffered a personal setback in late 2019. Did not continue with the plan to launch Turned out to be an actual blessing. Covid-19 would have wiped us out. Would it be fair to say we are now better positioned?

Given the current and projected economic climate, I’m inclined to think so.