Los Angeles Commercial Lease Incentives – When and What to Include

It’s common practice to offer commercial lease incentives to well-qualified tenants. You want to get a good tenant in place who will stay for a long time and follow the terms of your commercial lease. The most popular lease incentives are tenant improvements and free rent. We always try to sign tenants without any incentives at all, and sometimes that happens. However, most commercial tenants know they can negotiate these things, and we are willing to build the costs into their lease.

Commercial Tenant Improvements

When a business or office is moving into your commercial space, they’re going to have some ideas about how they want the space to look and what they’ll need to have an efficient and successful company working there. They might want a different layout, which will require wall dividers, or they might want specific flooring or changes to the paint or the walls. We are happy to make any reasonable improvements they request, and then we’ll include the cost in the rental amount. Sometimes, our tenants will have people on staff or teams of their own who can make the improvements at their own cost. As long as their vendors are licensed and insured, we’ll allow this.

Commercial Tenant Rent Reductions

Free rent is another negotiating tool, and it’s not as scary for owners as it sounds. You might want to offer your tenants three or four months of free rent at the beginning of their lease. But that doesn’t mean they won’t be paying anything. You’ll build that rent into what they pay beginning on month four or five. This provides a cost effective way for a tenant to move in without spending a lot of cash right away, and it allows us to increase the monthly rent once the tenants start paying. The landlord will still get market rent and the tenants will feel like they’re getting something for free.

If you’d like more information about how tenant improvements or free rental offers can help you negotiate a great lease with a good tenant, please contact us at Los Angeles Property Management Group. We’d be happy to tell you about this or anything pertaining to commercial property management in Los Angeles, CA.