How to negotiate a retail store lease agreement in Massachusetts

On Behalf of | Oct 24, 2023 | Real Estate

It’s natural for people to want the best deal for themselves. If someone can find a way to take more than expected in any transaction, they will likely not waste that opportunity. In this regard, a landlord or landlady in Massachusetts will always ensure they get the best deal for themselves when creating a commercial lease agreement. However, you can change this in your favor by being a smart negotiator. Here’s how to do so.

Understanding the basics of commercial leases

First, you need to arm yourself with knowledge. There are three types of commercial real estate leases that you are likely to encounter: gross lease, net lease and modified gross lease. In a gross lease, the tenant pays a set rental amount while the landlord assumes responsibility for all other expenses associated with the property.

A net lease comes with a lower monthly rent, but tenants are responsible for paying a share of the property expenses, such as property taxes, insurance and maintenance costs. While a modified gross lease is a mix between the two – it has a fixed rent amount but also includes some shared expenses.

Research the market and understand the potential costs involved

Next, you want to ensure that you are getting a deal that fits your budget and caters to your needs. Start by researching the local market and understanding the average rent prices for similar commercial properties in the area. This will give you a point of reference, allowing you to have a more effective and informed discussion.

Then, ensure you understand all the potential costs involved, such as utilities, security deposits, taxes and any additional fees that may be included in the lease agreement. Hidden costs can add up quickly, making your lease more expensive than you anticipated.

Check for provisions that might affect you in the future

Terms like a competitor clause, exclusivity clause, or co-tenancy clause can significantly impact your business in the future. For example, a competitor clause might restrict you from leasing another space within a certain radius to avoid competing with other tenants in the same building.

Successfully negotiating a commercial lease requires a keen understanding of the market, a thorough examination of the lease terms and a proactive approach in identifying potential future impacts. As you venture into this process, arm yourself with knowledge and fortitude, but also maintain a willingness to compromise.