M.K. took home the Gold in our first writing contest. Here, we’ll take a look at what made this article stand out, as well as examine some ideas for future improvement. M.K.’s article text appears in bold, with our comments in plain text.
Title: How to Negotiate a Commercial Lease
Great title. Clear, succinct and confident. “How to” titles really start out with a tacit understood “Read this article and find out…” Provided the content fits the bill, “how to” titles are powerful attention grabbers reaching out to both publishers and readers.
Article Synopsis: Negotiating a commercial lease requires tenant savvy. You may find a gross lease advantageous, while a net lease can contain unknown costs.
The synopsis starts by making a case for the problem rather than quickly detailing the article contents. Publishers like to glance at the synopses, so they should work with the title to deliver a snapshot of the complete article. “Actionable information for commercial renters, including industry jargon, cost considerations and more.”
Your business location is bursting at its seams, no longer able to provide the room for you to effectively manage your operation. Work stations are cramped, your meeting room is small and your customers are having a difficult time finding parking spaces.
This stage-setting introduction works fairly well. It gets the reader thinking about his or her current commercial space. I’d suggest adding a section (or writing an additional, slightly different article) acknowledging first-time commercial renters, since all of the article advice would be similarly applicable.
When business is doing so well, it is time for you to look beyond your current commercial space. Many months before your present lease expires, you can begin the process of finding new space, an endeavor that should never be rushed and must take into account your needs for several years out.
Most businesses get overwhelmed when considering a move, so the idea to think ahead is a very good one with which to lead. It’s both a problem and a tip, so it fits here.
Commercial leasing typically favors the landlord, but with time on your side and good market selection on hand, you can negotiate a commercial lease that includes several landlord concessions.
Now the stage is set for the meaty tips.
Location, location, location — The type of business you run will determine the location you need to effectively reach your customers. If you have a retail shop, then you may want both good road and foot traffic. You’ll pay more per square foot for a prime location and less for the shop located further away from the street or away from an anchor tenant.
If your business is a factory, a warehouse or the back end operation of a corporate firm, you may be happy to have the space you need at the far end of your city’s warehouse district. Your customers can still find you, but your rate will be lower than the commercial property located right along the busy highway.
Pretty basic concepts, conveyed quickly and clearly.
Lease terms — While a long-term lease can lock you into a manageable rate for many years, it can also take away the flexibility you need to move if your business grows, shrinks and simply needs to move out of the area. Longer term leases, however, often come with more concessions, so decide what is important to you.
One way to straddle both the short- and long-term lease options is to negotiate a short term lease with the option to renew for more years. For example, if you opt for a one-year lease, you can ask for the option to renew annually for the next four years. You’ll need to notify the landlord in writing a month or two before the lease expires whether you will opt to extend your lease or let it expire and move out. Consider this option if you aren’t sure if your business might eventually outgrow your space.
Nice explanation of the pros and cons of each, with a compromise option.
Rental rates — Compare rental rates for like properties in your area. If you have a restaurant, compare the rent at a strip mall to the rent of a downtown location. The first choice may offer ample onsite parking. The second option may bring with it much foot traffic with on street parking and public parking nearby.
If the rent on a desired property is higher than market conditions, you may be able to negotiate a lower rate. If your landlord won’t lower his rate, he might be receptive to lowering your rent for the first few months to help defray moving costs.
Landlords are sometimes lazy and/or unaware of market rate fluctuations. Occasionally, if they’ve just lost a long term tenant, they may seriously under- or over-value their properties. Knowing the comps will insulate you from paying too much. Also, the article misses a key opportunity to explain that commercial leases are often expressed as a cost per square foot per year, which is very different from residential leases.
Expect that your landlord will want to raise your rent annually for a multi-year contract. That increase might be based on the cost of living index or it could be a set amount such as $200 per month for each year. Try to get a cap on the increase and opt for a gross lease wherever possible to cover the cost of taxes, insurance and utilities.
Good job setting the expectations of the reader. If a yearly increase comes as a surprise, it could be off-putting.
Unimproved space — Is the space you’re considering leasing green or unfinished, or it is complete and ready for occupancy? Space that needs much work to bring up to a level that can be satisfactorily occupied is a cost that you can ask the landlord to bear. You have the advantage here if you can sign a long-term lease. A landlord that knows you’ll be around for the long-term may make improvements that correspond to the length of your lease agreement.
Build-out costs can make a huge difference in the overall cost of a lease; sometimes a higher monthly rent will be desirable if the property owner funds the build-out or if the space is already ready to go.
Legal Matters (This section was set off differently; make it consistent for best readability)
Your commercial lease will be constructed either as a gross lease or a net lease. A gross lease will run you more as it covers all expenses including utilities, property taxes, maintenance, repairs and other upkeep. A net lease comes in lower, but you’ll be responsible for these costs separately. If you live in the snow belt, you can get slammed those years where snow removal costs come in much higher.
Here is a good opportunity to add a bit of info. on jargon. Net leases are sometimes expressed as “NNN” or “triple net.” Define these terms so the reader has the tools to succeed without needing to look up other resources later if faced with an unfamiliar term. Full Service Leasing is another option that could be explained.
Finally, ask the landlord for the right to sublease or assign your lease to a new tenant. With a sublease, you’re allowed to rent out a portion of your space to someone else. With an assignment, you can turn your lease over to another qualified tenant without penalty. Work with a commercial real estate attorney to ensure that your rights as a tenant are protected.
It’s a nice final set of points for the “Legal Matters” section. A few closing thoughts to tie things together and offer some encouragement would boost this article to greatness.
We were very pleased with the many entries in our contest. Hopefully our break-downs help to demonstrate how almost any article can be touched up a bit. We’re not perfect, and we don’t expect perfection from our team of writers. But we are always hoping to deliver the best content possible, and hope you’ll be inspired to give your articles just a little bit of extra attention to push them into medal contention. The reward is better PR blog placements, and, of course, more money for each article! Thanks for the great entries, and keep up the great work!