Commercial leases are known for being wordy and difficult to comprehend. In past blog posts, we’ve talked about some ways to negotiate the best commercial lease agreement possible for your business. One of the best ways to preemptively protect your business from any sneaky property owner tricks is negotiating to add special clauses to your lease agreement.
There are 3 particular commercial lease clauses that offer the most protection for small business owners – and they’re the same ones property owners hope you never know to negotiate for.
To make sure your next lease agreement works in your business’ favor, don’t take no for an answer when you ask for the addition of these commercial lease clauses.
3 Commercial Lease Clauses Property Owners Don’t Want You to Know About
1. Sublease clause
What would happen if you suddenly had to close up shop or could no longer do business from the location you were leasing? You’d be out on your bum if you didn’t negotiate for a sublease clause. A sublease clause allows you to legally sublet your commercially leased property to another business in the event you need to do that. Even if it doesn’t seem like a probable situation now, it’s smart to have the clause included just in case things change.
What to say: “My attorney and I looked over the lease agreement and noticed a sublease clause wasn’t included. I was advised not to sign the lease until that clause has been added to the agreement.”
2. Exclusivity clause
The exclusivity clause is the lease equivalent of agreeing to “go steady” with a love interest. With this clause in place, your landlord won’t be able to lease adjacent or nearby property to your direct competitors. A major component of negotiating this type of clause in your lease agreement is the importance and success of your own business. Only “anchor tenants,” or those who draw in customers and foot traffic to a commercial building because of a well-known or successful business and brand, are in the position to ask for such a clause to be included.
What to say: “By being insulated from our direct competitors, my business will be able to provide lower prices and a wider selection of products to our customers in this location. It would be mutually beneficial for us to add an exclusivity clause to our agreement. I’d be more comfortable moving forward once that is in place.”
3. Co-tenancy clause
We mentioned anchor tenants above. If you’re leasing property where an “anchor tenant”–a large business that brings in customers–is also leasing property, you should ask to include a co-tenancy clause that allows you to break your lease if the anchor tenant closes down or moves out and is not replaced by another anchor business within a specified time period.
What to say: “A big factor that drew us to this location was the presence of [the anchor tenant company]. We’d lose considerable foot traffic and customer flow should that tenant move or close down, so before we can sign, we’d like to see a co-tenancy clause included in the agreement.”