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Negotiate Lease · Article
Your lease is one of the biggest fixed costs in the business, and you sign one every few years at most. Here are the nine mistakes I see tenants make when leasing premises, and what each one really costs over the term.
A client came to me a while back about a lease he'd already signed. Good site, fair-looking rent, tidy fit-out.
Six months in, the numbers told a different story. The rent was fine. The outgoings, building costs and everything else piled on top pushed his occupancy far past what he'd planned for.
Leasing premises is one of the largest financial commitments you'll make, and one you make least often. You sign a lease every few years. Your landlord signs them every week. That gap is where money quietly leaves the business.
Here are the nine mistakes I see most often, and what they actually cost over the life of a lease.
Before you sign anything, you need to know two things well: the property, and the person who owns it.
The property has to fit the business today and as it grows. The landlord matters just as much. One with a history of squeezing tenants or dragging out repairs will cost you time, money and stress for years.
Skip this and you can end up locked into a site that doesn't work, or tied to a landlord who makes every request a fight. Both are expensive, and both are hard to undo once the lease is signed.
Reading the lease and understanding it are two different things. You have to know what every clause does to your business.
A few terms decide most of your long-term cost:
What lands in the first draft is not fixed. Almost every term in a commercial lease is negotiable, and the landlord expects you to push.
The pressure to sign is real. “This offer won't last.” “These are the best terms I can do.” Sign under that pressure without dealing to the terms that matter and you carry the cost for the whole term.
Weighing up a lease right now? A 30-minute call will tell you whether the rent, the terms and the site actually stack up, before you sign.
I've watched tenants outgrow a site in 18 months, then pay for 4 more years in premises that no longer fit. I've seen others need to move and find they had no right to sublease or assign without the landlord's say-so.
Build in room to grow and a way out before you sign. Expansion rights, break clauses and assignment provisions are cheap to negotiate in and expensive to wish for later.
Would you go to court without a lawyer, or face an audit without your accountant? Leasing premises is a bigger financial decision than most tenants treat it as, and plenty walk in with no one on their side.
The agent showing you the space is paid by the landlord. Friendly, helpful, and working for the other party. Their job is the best deal for the landlord, which by definition isn't the best deal for you.
Be just as wary of “free” tenant reps whose fee comes out of the landlord's deal. If the landlord funds your advisor, that cost is baked into your terms and the loyalty is split. We act for tenants only. The way to know someone is working purely for you is to engage and pay them yourself.
A space can look perfect and still be wrong for your use. Zoning, body corporate rules, and centre or building restrictions all decide what you're actually allowed to do there.
Check them before you sign, not after. A great-looking lease on premises you can't legally trade from the way you need to is money spent on a space that's no use to the business.
Rights of renewal are what protect your tenure. Get them wrong and you can be forced out at the end of the term, right when the business is settled and trading well.
Negotiate the renewals when you sign the first lease, and diarise every notice date. Miss the window to exercise a right of renewal and you can lose it entirely, then face a move you never wanted or a much worse deal to stay.
Most spaces need work before you can trade: fit-out, services, sometimes structural changes. Those costs are real, and they land on you unless you negotiate otherwise.
Factor them in before you agree the rent, and push for a fit-out contribution or a rent-free period while you set up. Ask the landlord to chip in after you've signed and the answer is no. This lever is only available before the deal is done.
The relationship doesn't end at signing. You'll deal with this landlord for years, over repairs, reviews, renewals and the odd problem no one saw coming.
Keep the communication steady and professional. Let it drift and small issues harden into disputes, and disputes are slow and costly. When you're at odds with your landlord, it's usually the business that pays for it.
The good news: a better process is simple. It just has to be deliberate.
If you're weighing up premises or a lease right now, the most valuable hour you can spend is before you sign, not after. A quick conversation will tell you whether the site, the cost and the terms actually stack up for your business.
Book a no-obligation call to talk it through. Either way, you'll go in knowing what the deal really costs.
Get a tenant-side read on the rent, the terms and the site before you sign. 30 minutes, no obligation.
Tell me about the premises you're weighing up. In one call I'll tell you what it really costs, where the risk is, and what I'd push for. No obligation.
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