If you are looking for a commercial space for your business, you want the best deal you can possibly get. Relatively, if you are a landlord, you want to attract and maintain tenants to choose your “service” over that of another. That is where lease concessions come in to help both the tenant and landlord get what they want out of a lease.
What are Lease Concessions?
In simple terms, a lease concession is a discount, benefit or incentive given by the landlord to the tenant. Just as other service providers, landlords want to do all they can to entice potential “customers” or tenants into choosing their service. Lease concessions do just that. These are extremely valuable to small businesses and can help them save a lot of money throughout the course of their lease. Some examples include abated or free rent during move in, tenant improvement allowances, move-in allowances, reduced fees and shorter lease terms.
Pros and Cons
Lease concessions are a great way to reduce out-of-pocket costs both during move-in and throughout the lease term. Business owners typically encounter large costs when entering a new place, and these concessions can sometimes help with these. They are especially of value to small business owners who are just starting out and need some leeway in business operations.
The main con to lease concessions is that the landlord might not fulfill each request. Some landlords might be firm on their lease terms and unwilling to come down on rent amounts or offer allowances. One way to help with this is to approach the negotiation process with an experienced commercial real estate broker. These brokers are knowledgeable in the different types of concessions and will be able to help you navigate what would work best for your specific case.
Should you be Asking for Lease Concessions?
Choosing to negotiate lease concessions are especially effective if there is an abundance of the property type in the market, if the market is starting to slow and if the property is less desirable. As you can see, market conditions are a large factor in whether you will be able to obtain every concession you desire or not.
Lease concessions are only a small part of the larger lease negotiating process. Talk to a professional broker and get some help to ensure that you are getting the best deal possible!