Working Effectively with Commercial Real Estate Tenants Today

When you get a new tenant entering into a lease in a commercial or retail property you are starting a business relationship for the long term.  At the centre of the business relationship you have the lease and that document holds the tenant and the landlord to particular actions and relationships for a number of years.  It directly follows that the lease created for a property and any new tenant should be well considered to match the property type and the targets of the landlord.

Let’s say you have just established a lease negotiation with a new tenant, and occupancy starts soon.  Here are some of the bigger issues to be concerned with as the tenant transitions into the new occupancy.

  1. Any landlord that is serious about property leasing should take the time to get a standard lease created for their occupancy and leasing requirements.  That ‘standard lease’ can match the investment targets and standards required.   Issues to focus on would include rent payments, rental types, outgoings recoveries, lease term and option (if any), and insurances or risk.  A good solicitor acting on behalf of the landlord should help with these things but the agent is the catalyst to get things sorted out.
  2. Access to the property should only be given when all lease obligations, signing, and payments have occurred.  Don’t give over the keys to the property until you know that all outstanding matters have been correctly completed.  Many a tenant has taken the keys to the premises before the lease is signed and then slowed the lease signing process asking for alternative occupancy terms and conditions.
  3. Fitout construction and approvals should be correctly considered based on the building codes, floor plates, property improvements, the landlord’s requirements, and the approval processes.  The tenant should be providing plans and drawings to support fitout design and construction before the fitout approval is given.
  4. The permitted use for the premises will match the property zoning, and the planning regulations.  With some tenants other issues also come into play such as health regulations.  Make sure you have the approvals to match the permitted use of the lease.
  5. Bonds or Guarantees protect the landlord when the tenant defaults.  The level of protection that you seek should be substantial and cover the landlord for losses associated with the tenant breaching the lease in any way.  It follows that the lease should have default provisions that protect the landlord in a timely way given the prevailing property laws locally.

From all of these things it is easy to see that the property owner in any lease relationship has a few very important things to cover in leasing premises.  When the lease document is correctly created, all parties know exactly what their obligations are for the long term.

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