Essential Elements of a Commercial Real Estate Lease – Part 1

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As commercial real estate attorneys, our office receives inquiries from landlords and tenants asking what are the essential elements of a Florida commercial real estate lease.

Over the next few weeks, we will discuss our thoughts on the essential elements to consider for every Florida commercial real estate lease, whether the reader is a landlord or a tenant.

The elements are not discussed in the order of importance. Depending on a reader’s particular circumstances, some elements may be more important than others or possibly unnecessary.

The first element to consider is utilities.

Utilities include electricity, water, telecommunications, internet and satellite, to name a few. The landlord will want to retain control of the type of utilities and the companies that may be providers. Understandably, landlord wants to avoid multiple utility providers of the same service, unless there is a sound business reason to do otherwise or if as a matter of law competition between providers may not be impeded by refusing access to a provider.

The conflict arises between tenant and landlord when each wants to deal with companies each prefers. The longer the term of the lease, the more important the issues surrounding utilities become. For competing reasons, both landlord and tenant may want to name the utility providers, what utility each company may provide and when the company may provide the service.

Will it be at the beginning of the lease term or later when the company may have the ability to provide the service? A landlord hot-button is a tenant allowing access to the real estate to install equipment without landlord having notice of the company’s access.

Understandably, a landlord will want a utility company, before the company enters the real estate, to sign an agreement with landlord that waives and releases claims for interruptions in service, inadequate service by the utility company and resulting damages. Landlord will want to require its tenant to indemnify landlord from the claims of others due to the tenant’s use of the utility, or its employees, its customers and business invitees.

Stay tuned for more elements to consider in a Florida commercial real estate lease.