Introduction
Once you have identified a commercial property that meets your business requirements, the next step is to submit a formal offer to the landlord. Understanding how offers are structured — and what landlords are looking for — can significantly improve your chances of securing the premises on favourable terms.
Submitting an Offer on a Commercial Property
An offer is typically submitted through:
- Your commercial property agent or surveyor, or
- Directly to the landlord’s marketing agent
In most cases, offers are made subject to contract, meaning they are not legally binding until formal lease documentation is completed.
The landlord’s agent is legally required to present your offer to their client promptly and accurately. Once submitted, you should receive written confirmation outlining the key terms discussed.
1. What to include in your offer
A strong commercial property offer should cover more than just the headline rent. Key elements normally include:
- Proposed annual rent
- Lease length (term)
- Break options (if required)
- Rent-free period or incentives requested
- Repairing obligations
- Use of the premises
- Timing for occupation
- Financial references or company information
- Whether the offer is subject to planning permission (if relevant)
Providing clear and detailed information demonstrates professionalism and credibility to the landlord.
2. Heads of terms (HOTs)
If the landlord is willing to proceed, the next step is usually agreeing Heads of Terms (HoTs).
Heads of Terms outline the principal commercial points agreed between the parties before solicitors begin drafting the lease.
They typically include:
- Rent and rent review pattern
- Lease duration
- Break clauses
- Repairing obligations
- Service charge arrangements
- Insurance responsibilities
- Deposit requirements
- Completion timetable
Although Heads of Terms are not legally binding, they provide an essential framework for the legal process.
3. Lockout (exclusivity) agreements
Once your offer has been accepted, you may wish to request that the landlord:
- Stops marketing the property
- Does not negotiate with other parties
This is known as an exclusivity agreement or lockout agreement.
While not always used, it can provide reassurance that you can proceed with legal costs without the risk of being gazumped.
However, lockout agreements must be properly drafted by solicitors to be enforceable.
4. If Your offer is rejected
A rejected offer does not necessarily end negotiations.
Landlords often consider multiple factors beyond headline rent, including:
- Financial strength of the tenant
- Lease length certainty
- Speed of completion
- Business reputation
- Fit with neighbouring occupiers
- Proposed use of the premises
Understanding the landlord’s priorities can help you adjust your proposal to reach agreement.
5. Negotiation strategy for tenants
Commercial lease negotiations are often flexible, particularly in changing market conditions.
Common negotiation areas include:
- Rent levels
- Rent-free periods
- Break clauses
- Fit-out contributions
- Repairing liability
- Lease length
- Deposit requirements
Professional representation from a surveyor can often achieve significant financial savings over the lease term.
6. Importance of timing and credibility
Landlords frequently favour tenants who demonstrate:
- Clear decision-making
- Financial readiness
- Realistic expectations
- Ability to proceed quickly
Providing references early and confirming funding arrangements can strengthen your negotiating position.
Professional Advice
You may benefit from professional support when making an offer, including:
- Commercial property surveyors
- Solicitors specialising in commercial leases
- Accountants or financial advisers
This is particularly important for long leases or high-value premises.
Summary
Making an offer on a commercial property involves more than proposing a rental figure. A well-structured offer that addresses lease terms, incentives and timing demonstrates professionalism and increases the likelihood of success. Once accepted, Heads of Terms provide the foundation for legal documentation and negotiations can continue until contracts are completed.
By understanding the landlord’s priorities and seeking professional advice where appropriate, tenants can secure premises on terms that support their long-term business objectives.
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