Commercial lease negotiations are sometimes lengthy procedures involving skilled negotiations in order for a company to get the lease they need. There are many factors that go into obtaining the right commercial office lease, from determination of actual space need, to having a good financial analysis done. In any office lease situation, a financial analysis is important to help a company determine how much they can afford to pay for space; it can also be used as a negotiating tool.
What Is A Commercial Lease Financial Analysis?
In the world of commercial real estate leasing, a financial analysis deals more with determining the cost of available space to lease and less to do with analyzing the finances of the leasing company. A financial analysis is still an important part of the commercial office leasing process because it allows a company to determine how much should be paid for a certain location as well as whether the fees are in line with the area’s commercial market. Essentially, doing a financial analysis on a specific building or space for lease is a way to determine whether that space being considered for leasing is higher or lower in comparison to other similar spaces in the same area.
Evaluating Commercial Leases
In order to do a thorough financial analysis for clients, commercial leasing agents consider important aspects about a leasing situation, including the base rent amount for an office space for lease as well as any additional amounts or reductions in fees that add up – adjusting the overall rent amount. These additional fees usually include things like parking charges; increases in operating expenses; caps on increases; cost to maintain buildings and/or bring them up to ADA standard; landlord contributions for improvements; utilities capacity and improvements; lease renewal or cancellation options; and other things that can increase the actual lease price paid. The cost of rent versus usable space is another important calculation when creating a financial analysis of a commercial space.
By evaluating these options and determining how they contribute to the overall cost of a commercial office lease, a company can make a decision based on two essential factors:
Whether the space being leased actually provides what is needed at an affordable price.
Whether the leased property cost is comparable to similar areas in that local commercial real estate market.
Financial Analysis as A Negotiating Tool
One of the best things about having a financial analysis done on a commercial space is that it typically provides a great negotiating tool for the company seeking the lease. Knowing the comparable market value o an office space lease gives a leasing company valuable bargaining power, especially in areas where the market may differ from the amount a landlord is attempting to secure in commercial lease negotiations. Skilled commercial lease tenant representatives can help determine occupancy costs of several lease options and provide an analysis to be used to get more attractive lease conditions when a landlord is willing to negotiate.
Effective commercial lease negotiations are an essential way to get a successful office lease for any leasing company. With a thorough financial analysis and occupancy cost report of the potential commercial office lease options, a company stands to get more of what they need for a lower cost. A skilled tenant representative can help a business looking for space to lease obtain a detailed financial analysis of available lease spaces, which can be used to negotiate a good lease for a fair price!
Need To Negotiate A Good Commercial Office Lease?
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