Are you looking to rent a commercial property?
As part of the lease negotiations, there is an opportunity to negotiate lease incentives. In this blog, I would like to share, what types of incentives can be negotiated.
When commercial properties are marketed by commercial property agents, the property details will mention a quoting rent which is normally printed as a PAX figure (per annum exclusive). This means the rental figure is quoted exclusive of VAT, service charge, buildings insurance, business rates, insurance, utilities, for example.
As the commercial property agents are acting on behalf of the landlord, there is no mention of what incentives might be available.
Incentives is the term that is used for money off a deal, to encourage businesses to take on a lease.
A word of caution though, be careful to avoid falling into a hidden trap. That is, whilst maximising lease incentives is beneficial for you, please avoid being caught into a lease that is heavily weighted in the Landlord’s favour. Otherwise, you may find you are getting a good deal at the start of the lease and a bad deal at the end.
Maximising incentives (whilst not leaving yourself open to getting caught) is an art that requires the skills of negotiation and the expertise and knowledge of what is happening in the property market. Commercial property agents are particularly skilled in the art of negotiation (as they deal with it day in and day out) and will be looking to keep incentives to a minimum for the benefit of the landlord. They are also keen to trade off incentives for a landlord friendly lease.
Let’s have a look at what incentives are available. The most common ones are, a rent free period, a reduction in the quoting rent, this can be a reduction in the quoting rent in the first year or over a number of years. A lesser known incentive is a landlord’s contribution towards your fit out. This can help ease your cashflow.
Negotiating and maximising incentives depends on the negotiating strength and experience of the parties. It is ok for you, not to have all the answers, however, having an expert on board as your trusted property adviser can help maximise lease incentives for you, whilst making sure you don’t get caught out unexpectedly.
If you would like a free conversation about lease incentives, then please contact us.
