commercial lease, page-6

Hi Davidols,

You could try to negotiate as follows:

1. Get the landlord to pay for the fitout but suggest that the cost be amortised over a five - ten year lease (on top of the rent that you are paying). That way the landlord is not out of pocket overall and you are paying it over 5 years - 10 years. Work out in advance and agree to the cost of fitout. That said, all of my tenants pay for their own fitout, which can often cost over $1m, but when they have asked for extensions to be done, then I use the above method.

2. Be careful of additional costs in the lease such as rates (water and rent), land tax, fire services and building insurance on behalf of the landlord. Find out what these are likely to cost you as well. In commercial leases, unlike residential, the tenant pays for all these outgoings. Ask for an updated fire services report. Have the landscaping brought up to date before you move in.

3. When negotiating the rent free period, if it suits you ADD the 2 -3 months to the lease, i.e. if the lease is to be say 1 year and would normally start on 1st August and you have 2 months rent free, have your two months rent free in August and September and then start the lease from 1st October going through to 30th September of the following year. That way you have technically got two months rent free but you still have a twelve month lease for example.

4. Check the mechanical services of the site before you move in, particularly if it is your responsibility to maintain the air con. Ask to see previous maintenance schedules for the air con. Otherwise ask the landlord to provide you with a updated maintenance report before you move in.

5. See if you can ask the neighbours who the previous tenant was and have a chat to them to find out what the landlord was like and any problems with the building.

6. Ask for an asbestos risk assessment report as well.

Hope that helps,

Cheers,
Tangrams

PS: I'm not a tenant but manage several commercial properties.