Commercial Lease Administration: Clauses That Make a Difference

Commercial Lease Administration: Clauses That Make a Difference

As a Houston commercial landlord, you might be struggling to find and keep the right tenants. After all, commercial rates are in a slump, as companies scale down their demand for office space and become increasingly discerning and demanding with the properties they choose to rent.

In order to maintain positive tenant relations and retention and ensure a healthy ROI, you need to look at your lease administration. By being strategic with your lease terms and clauses, you can ensure that a piece of paper strengthens your portfolio and makes your job easier.

Here are the essential clauses for commercial properties that you need to include in your lease agreement.

A Clear Use Clause

Any commercial lease agreement should begin with a clear, unambiguous use clause. This dictates how the property can be used by the tenant and for what purpose.

It's how you ensure that the property is only used for the purposes it has been zoned for. It's how you prevent illegal activity taking place on your property that you could be liable for. This clause is absolutely crucial.

Maintenance & Repair Guidelines

As a Texas landlord, you will have a certain stare of responsibility when it comes to maintenance and repair. However, you do not have to take on all of it in the same way you would if you were renting out residential property.

Commercial rental negotiations often include some haggling over who is responsible for what repairs, so try to spell this out with the right clauses in your lease. Setting out clear guidelines that all parties can agree on will save you time, money, and landlord stress.

Rent Escalation & Renewal Clause

You should always spell out how and when rents would be raised at the property you own. This provides predictability for the tenant and gives you some certainty when it comes to yield growth.

You can also set out clear terms for rent renewal, including a timeline for renewal. This will help keep tenants in your building for longer and reduce costly vacancy rates.

Indemnification Clause

Include indemnification clauses that hold tenants responsible for any damages, losses, or liabilities resulting from their use of the leased premises. This provides landlords with added legal protection and ensures that tenants bear responsibility for their actions while occupying the property.

You can also set out how a termination date would be decided upon in the event of a dispute that you are not able to resolve. This is exactly the kind of certainty you should be baking into all of your lease agreements.

Expert Lease Administration and Optimization in Houston

Lease administration is not a mere bureaucratic exercise. It is a strategic necessity. Smart lease clauses protect both yourself and your tenants.

It provides long-term certainty and can save you money, while also increasing your returns over time. If this is something you would like expert help with, you have come to the right place.

At PMI Infinito, we can draw up and enforce commercial lease agreements that protect and strengthen your portfolio. Get in touch to find out how we can help you today.