The tenant wants the certainty of knowing what his rent and charges are going to be on a monthly and yearly basis. The rate of businesses going bankrupt has apparently slowed down and it appears that most of the companies that are still in business now are going to survive. Like much of the US economy, the commercial real estate market has been down the last few years. These ecommerce features give clients much more of a motivation to look on the internet and encourages them to obtain your web store. The fuel consumption here is much lower since the trucks glide quite smoothly and you dont have to accelerate much. For example, if the tenant breaches the lease and abandons the premises prior to the end of the lease term, the tenant may have to repay the build out allowance, along with landlord’s other damages. The tenant should make sure it understands when and under what circumstances the build out allowance will be paid. Many landlords offer a tenant “build out allowance” as an inducement to lease the premises. These sums, however, do not represent “free” money and landlord’s payment of the allowance is tied to specific conditions in the lease.

In most commercially viable retail property, payment of percentage rent is unavoidable. The definition of CAM varies from lease to lease based on landlord preference, the type of property, and the negotiations of the parties. Further, unless the lease is gross, the landlord should identify the components that constitute the costs of operating the “common area” for which it seeks reimbursement through tenant’s monthly CAM charges. The tenant’s rent and responsibility for reimbursement of pass-throughs (CAM, taxes, insurance, utilities, etc.) are normally based on the rentable square feet of the premises. However, the “breakpoint” and amount of percentage rent should be negotiated. In the retail context, in addition to base and additional rent, the prospective tenant is often asked to pay landlord a percentage of tenant’s gross sales on a monthly or quarterly basis. Annual increases in these states are governed to be a certain percentage as well. Are you worried about your property?

These provisions vary by jurisdiction, landlord, building, tenant, and use of the property. Although, one needs to be careful that excessive use can trigger some issues in the stomach. The consequences of signing a “bad lease” can include unforeseen expenses and business failure. The landlord usually justifies these charges as a necessary component of compensating landlord for providing a vibrant mall or strip center for tenant to conduct business. Retail leases are generally utilized for shopping malls and strip centers. Many leases provide that the tenant may assign or sublet the premises with the consent of the landlord, which consent “shall not be unreasonably withheld”. The lease commencement date may or may not be on the date tenant occupies the premises. Also, the landlord may have promised the tenant a 60 month term but the lease could provide a fixed expiration date for a term of less than 60 months. Additionally, the tenant should understand his “lease commencement date” and “lease expiration date”. The lease should provide a definition of “tenant’s share” or “tenant’s proportionate share” based on the square footage tenant will occupy versus the square footage of the building.

This will include anything from downtime monitoring to security checks. The key: read your lease and KNOW every charge you will be faced with once your tenancy begins. As a general rule, the larger the space tenant intends to occupy, the greater the flexibility the landlord will show in negotiating provisions in the lease. However, if a property enjoys a high occupancy rate, a landlord will be less likely to show leeway in negotiating the economic terms of the lease. Another area of significance to the commercial tenant is the services that will be provided by landlord and reimbursement of landlord for those services. The landlord will normally want reimbursement for tenant’s share of real property taxes and landlord’s insurance costs. Pad or ground leases are often used for restaurant premises or for premises where the tenant will be responsible for building and maintaining the structure. Warehouse leases are generally seen for industrial or light industrial uses.