Commercial Lease Negotiations – A Fine Balance

The global economic recession has adversely affected several areas and commercial leasing has been no exception. In our February 2009 Commercial Real Estate Law Alert we explored certain commercial lease default issues. In this Alert, we identify certain lease provisions that may be subject to greater negotiation during these challenging times.

Until recently, the Canadian leasing market generally favoured landlords. Now, we may witness a shift towards a greater equilibrium with certain credit-worthy tenants enjoying increased negotiating leverage. Landlords who are receptive to tenant requests may potentially realize: (1) negotiation cost savings; (2) improved tenant relations; and (3) a competitive advantage over other landlords. Landlords will need to strike a fine balance, however, between accommodating tenant requests and ensuring they can promptly and effectively deal with problematic tenant issues.