Understanding the business aspects of a lease. Most tenants and prospective tenants focus primarily on the rent. The rent is only one component of a lease. The following are some of the clauses that need to be negotiated prior to signing a lease:
When does the rent begin. The tenant needs time to renovate, arrange for gas and electric and should never begin before a certificate of occupancy (CO) is issued. The use clause should be very flexible to permit future needs. In addition to paying rent the tenant will be paying a portion of the increased costs that the landlord will incur over the years to operate the property. The base year needs to be established and no capital costs should be included. In the event of a fire or other casualty to the building which cannot be repaired in a short period of time the tenant needs the capability to terminate the lease without any penalty.
In addition to thee above there are other clauses that could have a significant impact on the total occupancy cost of the space.
