In a commercial lease negotiation, the landlord almost always has a broker working for them. The tenant often has no one. A tenant representative, often called a tenant rep, is a commercial real estate broker who works for the tenant, from the first search through lease signing.
Whose side is everyone on?
The listing broker represents the landlord and is hired to lease the space on the landlord’s terms. A tenant rep has a different job: protect your interests, your budget and your timeline. That includes raising options and risks that the other side has no reason to raise.
Before any negotiation: define the need and build options
A strong negotiating position starts before you contact a landlord. A tenant rep works with you to define the size, location, budget, timing and must-haves, then surveys the market so you can compare more than one space. Landlords tend to negotiate differently when they know you have real alternatives.
For franchise tenants, this stage also includes market analysis and demographic review, site tours, and securing the franchisor’s preliminary approval of the site. You can see how we handle this on our tenant representation page.
The letter of intent
Most deals start with a letter of intent (LOI), a non-binding outline of the main business terms: rent, term, concessions, improvements, options and timing. The LOI is where many of the biggest points are won or lost, because the lease that follows is built from it. A tenant rep drafts or responds to the LOI so the key terms are settled before attorneys start on the longer lease document.
What typically gets negotiated
- Base rent and annual increases
- NNN or operating expense charges, and any caps or exclusions
- Tenant improvement allowance and who controls the build-out
- Free rent and the rent start date
- Term, renewal options and how renewal rent is set
- Exclusives and use restrictions
- Assignment, subletting and personal guarantees
- Signage and parking
Not every item is negotiable in every deal. What is realistic depends on the property, the landlord and the market. For a closer look at several of these terms, see what to check before you sign a retail lease in Omaha and our guide to commercial lease types and terms.
Where the attorney fits
A tenant rep negotiates the business terms. A real estate attorney reviews the legal language of the lease. The two work best together: the broker keeps the deal moving on the points that affect cost and flexibility, and the attorney protects you on legal risk. A broker is not a substitute for legal advice.
Timing matters
Lease negotiations take time, and delays have a cost, especially when you are still paying rent somewhere else or a franchise opening date is set. A tenant rep manages the timeline, stays in contact with the landlord’s side, and flags issues early so a small point does not hold up the lease. We covered more on this in our lease negotiation insights.
How a tenant rep is paid
In many commercial deals the landlord pays the broker’s commission, and it is often shared between the listing broker and the tenant’s broker. That is common, but arrangements vary, so always confirm in writing how your representative is compensated before you start.
Is a tenant rep right for your search?
A commercial lease is a long commitment, and most businesses only negotiate one every few years. Brightway Commercial has helped over 200 clients across the United States find and lease commercial space, and works with both local and national franchise brands. If you are looking at space in the Omaha area, our pages on retail space for lease in Omaha and Omaha commercial space for rent are a good place to see what is out there.
Talk it through before you sign
If you are actively searching for space or already negotiating a lease, Nate Ohlrich, CCIM, Principal Broker at Brightway Commercial, is glad to talk through your situation. Reach out here to set up a call or a meeting.
This article is general information, not legal advice. Have a real estate attorney review any lease before you sign it.
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