How to Create a Flexible Commercial Lease for Future Growth
Many business owners, especially
those who anticipate high growth, seek flexibility in their commercial leases.
A flexible lease can ensure a property meets your company’s needs over time.
To achieve a flexible lease, consider negotiating for the following clauses:
1. Sublet and Assignment Clause
A sublet and assignment clause can benefit your business should you outgrow your space before your lease ends. This clause enables you to transfer your square footage to someone else for the remainder of your lease, enabling you to relocate early.
2. Early Termination Clause
In general, tenants benefit from signing long-term leases, as you may receive greater tenant improvement allowances, lower rent rates and other landlord concessions. However, circumstances may arise that require a change in location before your lease term is up. An early termination clause would free you from your lease contract for a predetermined fee.
3. Expansion Clause
An expansion clause would enable your business to remain in
your current location while transitioning into a larger space. Expansion
clauses are typically offered as a right of first offer or right of first
refusal. A right of first offer means your landlord is required to offer any
available space to you before putting it on the market. An offer from a third
party activates the right of first refusal, where you have the option to lease
the space under the same terms if you so choose.