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The right to relocate in a commercial lease

If you're a small business owner looking to rent space in a busy strip mall or shopping center, you need to watch out for relocation clauses in a lease before you sign.

"Right to relocate" clauses are common, particularly when landlords are concerned about keeping their entire shopping center or strip mall occupied and busy. These clauses essentially give the landlord the ability to move your business to another open spot without actually breaching your lease.

Why would a landlord want to do this? Usually, it's out of practical concerns. The landlord may want to remodel and expand, for example, which might necessitate working through the space you currently occupy. Alternately, maybe the landlord was holding out hope that a stronger brand with lots of loyal customers would take that prime spot that you're in. When the dream tenant comes along, the landlord wants to be accommodating -- even if that means pushing you into a new (and less desirable) location.

Is a relocation clause an automatic reason to pass on a commercial lease? Not really. The odds are good that it won't actually be used. Exactly the right conditions have to come along and that may be a gamble you're willing to take.

However, that doesn't mean you can't negotiate for more favorable terms. Consider asking for a clause that:

  • Obligates the landlord to pay your moving costs. Keep in mind that you may have to expend extra hours on manpower on setup, plus pay for things like updating your contact information on your business cards and website.
  • Gives you the right to cancel the lease. Make sure that you are guaranteed the right to a comparable location when it comes to size and visibility. If your landlord tries to move you into cramped quarters down a dark corner of the strip mall, you want to be able to go elsewhere.

Your location is one of the bigger factors that can affect your bottom line, so make sure that you're comfortable with everything in your lease. The best time to dispute the terms of a commercial lease is before you sign -- when the landlord is most open to negotiation and willing to make concessions.

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