Commercial Leasing For Small Businesses

I (Marc Jacob) just wanted to share some personal thoughts on this topic since I get called upon to speak about it or weigh in on it quite a bit.  There is quite a bit of danger to a small business going into a new commercial lease.  While that term sheet you approved may look relatively benign, the devil is really in the details, and in the case of commercial leasing, those details are likely to be 20-60 pages long!

To navigate that process, it’s important that you bring in legal counsel early on in the process.  We’ve seen a number of clients give away things in the term sheet they did not have to, and once that term sheet is done, it is hard to get a landlord to open it back up for negotiation…whether it’s considered impolite or amateurish, or perhaps even dishonest no matter how innocently done, I am not sure, but does seem to be the customary way to deal with it in St. Louis.

So here are some basic considerations to consider, and to discuss with your attorney:

  1.  Will s/he agree to a flat fee or partial contingent fee to help you out (at least barring any unexpected happening)?
  2. How fast will the turnover be before you see their notes or get to discuss the lease review?
  3. What is the deliverable? Is it a marked-up lease, a redlined lease, or just a conversation?
  4. Will they agree to either conduct the negotiations or help you in the shadows for the same flat fee?

Anyhow, this is a short post, but it is just a topic that has been coming up and since it really is such a danger area for a small business and can cause so much stress, I wanted to share with you at lease some thoughts on how to find the right lawyer to help you.  As a small business owner, your budget is already tight, so it’s better to know up front what this cost will be before getting in too deep.  Also, your lawyer might know which landlords in town are more difficult or likely to be heavy handed and can guide you even before you get to the term sheet stage.

Happy Leasing!

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