What dates should you be aware of in your commercial real estate lease?

Yes, there are more than just one important date you need to know about!

Lease Commencement

The commencement date is the date on which the tenant can take possession of the leased space and begin using it for their business. This date is typically set by the landlord in the lease agreement, and is usually the date on which the tenant pays their first month's rent, but that is not always the case if free rent has been negotiated... Yes, many landlords will agree to free rent!

The lease commencement date is important because it determines when the term of the lease begins. For example, if a lease has a term of three years, and the commencement date is June 1st, then the lease will expire on May 31st three years later.

It also is important to note that the commencement date is not necessarily the same as the move-in date. The move-in date is the date on which the tenant actually moves into the space and begins using it for their business. In some cases, the move-in date (or right to access the property) will be before the commencement date, as you will need access to the space to prepare if for occupancy. In other cases, the move-in date will be after the commencement date, so you could end up paying rent before you move in if you are not careful in negotiating the lease.

Of course landlords will want you the lease to commence as soon as possible so they can start collecting rent, but landlords also understand that you need time to buildout your space. Just be sure to discuss the estimated time it will take you to buildout your space and be sure that you discuss the desired commencement date so  you both can agree on a date that works for the both of you.

Rent Commencement

The rent commencement date is the date on which a tenant begins paying rent. This date is often different from the "lease commencement date" and the date upon which you have the right to access the space. Ultimately, look at 

• the date you have right to access the space;

• the length of buildout period the landlord provides (if any);

• the lease commencement date; and finally

• the number of month the landlord provides in free rent.

Rent Commencement will be at the end of each of these periods, and you need to be sure you understand what triggers this date if it is not specifically spelled out in the lease agreement.

If there is an extensive build-out period and free rent incorporated into the lease, often times, a lease will include a rent commencement or lease commencement acknowledgement form that both parties sign to certify that everyone is on the same page. Keep in mind, this acknowledgment form MAY dictate when your lease expires or terminates, so it is not something that should be overlooked.

Build Out Period

The build out period is the time between when the tenant signs the lease and when they are able to move into the space. This period is typically used by the tenant to make any changes or renovations to the space that are necessary to suit their needs.

The build out period is important because it can affect the amount of time that the tenant has to pay rent on the space. For example, if a tenant signs a lease for a space that is not yet built, they may only have to pay rent for the portion of the year that they are actually using the space. This can be a significant savings for tenants who are planning to make major changes to the space.

When negotiating your lease, be sure to discuss the desired build out period with your landlord so that you can agree on a timeframe that works for both of you.

Construction delays can cause major problems for tenants who are trying to move into a new space. If the tenant is not able to move in on the agreed upon date, they may have to pay additional rent or fees to the landlord.

When negotiating your lease, be sure to discuss the possibility of construction delays and how they will be handled. This way, you can avoid any unexpected costs associated with delays.

Tenant build out, construction delays, and rent are all important factors to consider when leasing commercial space. Be sure to discuss these topics with your landlord so that you can agree on terms that work for both of you. By doing so, you can avoid any potential problems that may arise during your lease term.

Termination or Expiration Date

The expiration date is not always cut and dry, so if you see this date outlined clearly in the lease, the good on you! But often times, there can be delays in commencement or build out that mask when the termination date really is. That being the case, you definitely want to be sure there is mutual agreement on this particular date as it could negatively impact your leverage when negotiating extensions or what is worse, it could lead to an eviction that lease your business without a home! So be careful with this one!