What is “Base rent”?
The term "Base Rent" refers to the minimum rent due under the terms of a lease. “Base rent” does not include property taxes, maintenance fees, etc...
What is meant by “additional rent”?
The additional rent represents the administration costs of the rented space and of the building (electricity, taxes, maintenance, insurance, etc...). The cost is dependent upon the number of square feet used.
Can you negotiate your rent?
Everything is negotiable, such as base rent, additional rent, installation and tenant improvements.
Is it better to negotiate a short or long term lease?
For a start-up business the length of the lease should be as short as possible. This will improve cashflow and minimize obligations, especially if your project is not as successful as forecasted. This is most important if you are personally liable for the lease. On the other hand, it is important to note that a better price may be negotiated if the lease term is longer.
What is meant by “Installation Period”?
The tenant may negotiate an installation period. This is granted in order to allow the tenant time to install the needed equipment and prepare the rented space for business. The number of weeks and months granted is specific to the nature of each business. The tenant must subscribe for insurance during the installation period.
What is meant by “Tenant Improvements” (TI’S)?
Tenant improvements are to be negotiated within the promise to lease document. It is an amount granted by the lessor to the tenant in order to cover part of the installation costs. This amount is usually calculated on a dollar (872 872 per foot basis.
Does a commercial lease automatically renew?
Contrary to residential leases, renewal options are to be negotiated in the initial lease. These options are important in order to prepare an eventual sale of the business. Options are very strategic for the tenant as well as for the eventual sale of the business.
Are options important?
Options are very important within a lease, mainly because the installation costs of a business are very high and mostly because the location of a business is of utmost importance. Options must also prepare the eventual sale of the business and must take in consideration present and future market and competitors.
Should options be viewed as obligations from the tenant?
No, options are simply rights that are negotiated in advance. The tenant may choose to exercise them or not. The lease must indicate the time period where the tenant may choose to exercise these rights.
Do real estate brokers negotiate leases?
The services of a professional and competent real estate broker are very useful for your business. You must ensure that he or she has the experience and the knowledge when it comes to negotiating a lease. It must not be undermined that a lease is a contract that ties the Lessor and the tenant for a long period of time.
How many brokers are recognized as professionals in commercial and industrial real estate?
The ACAIQ states that less than 6% of the 17000 real estate brokers are professionals in commercial and industrial real estate. The commercial and industrial segment differs greatly from the residential segment (requirements, forms, documents, etc...).
Are the commercial and industrial contract the same as the residential ones?
In order to finalize a commercial or industrial sale or lease, the standard residential documents are not to be used. Each case is specific in its nature and requires specific negociation and legal clauses in order to secure both parties and ensure a profitable transaction.