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How long should my commercial lease be?

On Behalf of | Jun 15, 2023 | Real Estate Transactions |

Renting commercial real estate in Arizona typically involves different lease terms and negotiation techniques than when you rent a residential property.

There are many factors that you should consider when negotiating your commercial lease terms. The terms will depend on the type of business you run, whether you are a new or established business and how much space you need.

Commercial lease lengths can vary

One of the most important decisions involves the length of your lease. Unlike residential leases, which usually have a lease term of 1-year or month-to-month, the length of a commercial lease is typically much longer. Commercial leases often run anywhere for 1 to 10 years.

Commercial landlords prefer long lease terms for various reasons, particularly because they may have a hard time finding another tenant to fill the space. However, negotiating your lease terms is meant to involve some compromise on the part of both you and the landlord.

Therefore, if your landlord proposes a term that are uncomfortable with, propose an alternative lease term and let them know why. Before you do that, you should consider the benefits and drawbacks of short-term and long-term commercial leases.

Advantages of a short-term lease

A short-term lease provides you with the security of knowing you are not stuck in a lease if you go out of business. If your business closes, you are still responsible for the rent for the remaining lease term.

Additionally, a short-term lease allows you the flexibility to move if your business needs change.

Advantages of a long-term lease

Alternatively, you might prefer a long-term lease for the security of knowing you are going to be in the same place for a while and not have to move. Landlords are also often willing to put in more favorable lease terms for tenants with longer term leases, as well.

Overall, while you should expect a longer lease term with a commercial lease, you can negotiate a length that works best for you. There are professionals who can review a proposed lease and discuss your situation with you.