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Why Tenants Get Stuck in Bad Leases and How to Avoid It

By Mark Foster
April 01, 2018

By the time most businesses decide they need additional space to accommodate their growing operations, it is too late. While there is something gratifying about organic growth emblemized by folding tables in a conference room and triple occupant cubicles, the commercial leasing process is inherently stacked against tenants. This disadvantage is only compounded when the tenants are unprepared.

With the proliferation of institutional landlords in nearly every major U.S. market and across every asset class (not to mention an improving economy), commercial tenants encounter brokers anxious to make a deal and landlords under pressure from investors to stabilize rents. Even when the parties agree upon a “fair market rent,” today's institutional landlord comes armed with a 70+ page lease that will govern every aspect of the tenant's occupancy for next five, 10 or even 20 years. The result, not surprisingly, is that tenants end up signing leases that offer little to no flexibility as their businesses expand and contract, setting the stage for economic and operational stress that could have been avoided with upfront planning and prudent lease negotiations.

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