Commercial Lease Negotiation Tips for Tenants

by - Wednesday, May 02, 2018

As with any lease, commercial landlords and tenants both have certain rights and obligations they’d like to see included among the terms of their agreement. However, the needs of the parties to a commercial lease to differ slightly from the concerns of the parties in the residential context. The purpose of this article will be to provide some negotiation tips for the tenant in a commercial lease, but additional advice for both tenants and landlords should be obtained from a reputable real estate lawyer.

Set Clear Conditions for Commencement

Occasionally in a commercial rental space, landlords must make certain repairs and improvements before a tenant is able to move in. Other times, the lease will call for the tenant to make these repairs. In either case, it is essential that the tenant push for a commencement date after the repairs are made and the tenant is able to move in and commence business operations. Otherwise, the tenant is paying rent for a space they can’t use.

In a similar vein, the tenant should not allow commencement to take place before the expiration of their previous lease, if such exists. Failing to do so means paying rent on two commercial spaces simultaneously – a significantly costly proposition.

Penalties for Delay

If the landlord is responsible for making repairs improvements prior to commencement and fails to complete them in time, or if the tenant is supposed to make the repairs but the landlord somehow impedes the tenant’s completion of the improvements, then the tenant will want to have a clause that makes the landlord liable for any damages caused as a result. For example, the tenant may have to store its trade fixtures for a fee since they have nowhere else to put them, or they may have to remain in their previous space after the expiration of their lease, incurring costly holdover penalties. You’ll want to ensure that the landlord covers these costs.

Rent Abatement for Interruption of Services

For obvious reasons, landlords are not keen on giving rent abatements. The whole purpose of their relationship with you is to collect rent. However, there are certain situations in which a tenant is entitled to withhold all or a portion of rent. One such situation is the prolonged deprivation of utility services. If you have no heat or water going to your unit, then you can’t do business and are losing money. Therefore, you’ll want to negotiate forcefully for the abatement of rent in these types of situations.


Indemnifications are an expected part of commercial leases. Essentially, the landlord will require you to reimburse them if they are sued by invitees who are injured in your unit during the normal course of business. However, you should resist indemnification clauses that require you to reimburse the landlord for injuries incurred in situations beyond your control [e.g. “acts of God”].

Have a Sufficient Use Clause

The lease should spell out the permitted uses for the space. A basic office use clause is probably enough, but if you have a unique business requiring atypical uses of the property, then be sure to have that use authorized in the lease. You may also want to push for an exclusive use clause making you the only tenant allowed to engage in a particular use, thus reducing competition.


The above list serves to provide the commercial tenant with some important terms to negotiate for when drafting their lease. However, there are a lot of additional things you may have to worry about in your particular case. Doing your own homework [and hiring an experienced real estate lawyer] are going to be essential steps in the lease negotiations to ensure that all your bases are covered.  

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