May 18, 2024


Mad about real estate

Tenant Favorable Lease

Hire an experienced real estate agent as tenant representative when negotiating a commercial lease agreement in San Jose, Santa Clara, and Sunnyvale, California. Landlords and their exclusive agents are very aware of current market conditions and will attempt to suggest lease language that will be to their advantage. It is prudent for any tenant to get a professional help to negotiate lease terms on his or her behalf.

Commercial tenant representatives identify all available sites that meet your criteria, rather than limiting choices to those that are exclusively listed for landlords. The goal is to obtain favorable lease terms and reduce occupancy costs to the tenant.

Tenant reps help guide the business points that should be examined in the lease negotiation. These include the rental rate, lease term, extension options, renewal rights, expansion space first right of refusal, lease guaranties, use and exclusivity clauses, construction and alteration terms, assignment and subletting agreements, and insurance and indemnity clauses. Default and remedy requirements are typically minimum. Depending on the actual circumstances, there are many other issues that would likely trigger modification to other lease language to enhance the tenants interests and limit costs during the leasehold period.

Each paragraph of the lease agreement may be modified to benefit the tenant or the landlord. Usually this is a zero-sum game where one partys gain is the other partys loss. Absent a tenant rep, the landlord has the advantage. It is very important for the tenant to get the business practice advice from a real estate professional, the tenant rep, to provide an understanding of local practices and incentives, such as free rent, tenant improvement allowances, and other inducements, before entering into a lease agreement. The landlords agent is certainly not going to offer any help that will reduce the landlords position.

There are two separate roles required, legal and business. Tenant legal counsel is required to provide advice about specific language in the lease agreement. However, seasoned real estate professionals in the form of tenant reps are better prepared to handle the business issues in the lease.

Then, there is the concern of what happens if something goes differently than expected during the term of the lease. What happens when there is a major interruption in operation of the space? How do we deal with a sudden unexpected economic event? It is prudent to put some safety clause in the document to allow the tenant protection or relief if some extraordinary event occurs.

In summary, commercial lease agreements are vital to a tenants business. It is important that the tenant get a fair agreement that will allow the business to prosper during the lease duration. The agreement between landlord and tenant will be much better for the tenant if he uses the services of a tenant rep. Best of all, the tenant rep fee is traditionally paid by the landlord. The landlords agent has an exclusive agreement with a fee that is customarily split with the agent procuring the tenant (in this case, the tenant rep). So, the tenant gets representation that is rightfully his, and without any additional cost.