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  • Writer's pictureDeLone Dawisha



Navigating commercial lease negotiations in Michigan for tenants can be challenging, especially for those unfamiliar with the complexities of such transactions. These legally binding agreements can have long-term financial implications, as they typically span several years and entail substantial monetary commitments.

The stakes are high, and missteps in negotiations could result in unfavorable terms, such as high rent, extensive liabilities, or restrictive conditions, or even land you a less-than-ideal space in terms of accessibility and customer visibility. On the other hand, a successful negotiation doesn't just mean securing the lowest rent—it means establishing a lease agreement that provides your business the space to grow, safeguards your rights, and sets the stage for your enterprise's success.

Whether you're a budding entrepreneur or a seasoned business owner, the journey through lease negotiation can often seem overwhelming, riddled with legal jargon and financial intricacies. But fear not; this well-trodden path can turn from a daunting endeavor into a rewarding experience with the right preparation and insights.

That's where the role of an experienced real estate attorney comes in. This comprehensive guide is designed to demystify the process and complexities of commercial lease negotiations in Michigan. We will explore the different types of leases, delve into key considerations, and discuss strategies to secure a deal that aligns with your business objectives.

Welcome to the journey of commercial lease negotiations in Michigan—let's navigate these complexities together.

Disclaimer: The information provided in this blog post is intended for informational purposes only and does not constitute legal advice. Please seek the advice of an attorney in your respective jurisdiction before making any decisions based on this information.


1.) Understanding the Market

As with any real estate transaction, understanding the local market is crucial in commercial lease negotiations. Michigan's commercial real estate landscape is diverse, with cities like Detroit and Grand Rapids each offering unique opportunities and challenges. Begin by researching recent leasing trends, property values, and market forecasts in your desired area. This information forms the foundation for your negotiations, enabling you to assess the fairness of proposed rental rates and terms.

In-depth market research goes beyond knowing the average lease rates—it encompasses a comprehensive understanding of various economic factors that impact the value of commercial properties.

a.) Economic Indicators: Pay close attention to local and national economic trends. Is there economic growth, stability, or a downturn in the area where your desired property is located? Economic growth often attracts more businesses, which can increase demand for commercial space, leading to higher rents. Conversely, an economic downturn can reduce demand, potentially providing opportunities for negotiation.

b.) Vacancy Rates: The vacancy rate in the local area is another crucial market indicator. A high vacancy rate often signals a tenant's market, where the abundance of available spaces could give you more leverage in negotiations. Conversely, a low vacancy rate suggests a landlord's market, where you may face stiffer competition and less negotiating power.

c.) Comparable Lease Transactions: It is crucial to understand comparable lease transactions in your desired location. Look at the terms of recently signed leases for similar commercial properties. Information about lease length, rental rates, concessions granted, and lease incentives can be beneficial for your negotiations.

d.) Future Developments: Future planned developments in the area can also affect property values. Are there any planned infrastructural improvements or developments that could increase the desirability of your chosen location? Is there a risk of oversupply from new commercial space coming onto the market?

e.) Property-Specific Factors: Finally, understand the specific factors that impact your potential property. For instance, the building's age, condition, accessibility, parking availability, and visibility can significantly affect its value and the lease terms you can negotiate.

Thorough market understanding can be time-consuming but ultimately empowers you to negotiate with confidence and secure a lease agreement that aligns with your business goals.

In addition, working with a commercial real estate broker can be an asset in this process. Brokers have access to commercial real estate databases and a deep understanding of local market dynamics. They can help you find the right property and provide essential insights during the negotiation process.

2.) Know Your Primary Lease Types

Commercial leases in Michigan generally fall into four categories, each with its specific pros and cons: net leases, gross leases, and modified gross leases. Each type affects how you'll share costs such as utilities, maintenance, taxes, and insurance with your landlord. Understanding these terms, their implications, and the prevalent norms in your area is a vital negotiation tool.

a.) Net Leases: In net lease agreements, the tenant bears a portion, or all, of the property's operating costs in addition to the base rent. These costs can include property taxes, building insurance, and maintenance costs. This arrangement allows the landlord to predict their income more accurately, as they are not responsible for variable costs. Net leases are further categorized into single net, double net, and triple net leases:

i. Single Net Lease (N Lease): The tenant pays the base rent and property taxes. The landlord handles insurance and maintenance costs. This setup allows the tenant to have a fairly predictable cost structure while ensuring the property tax is covered, which is particularly important if the property tax assessment increases.

ii. Double Net Lease (NN Lease): The tenant is responsible for the base rent, property taxes, and building insurance. The landlord covers maintenance costs. This arrangement offers the landlord greater security against changes in insurance costs, but they still bear responsibility for property upkeep, which can vary.

iii. Triple Net Lease (NNN Lease): The tenant pays for all operating costs - property taxes, building insurance, and maintenance costs, in addition to the base rent. This lease type is common in commercial real estate but can be less predictable for tenants due to potential fluctuations in operating costs. However, the triple net lease often results in a lower base rent for the tenant, as the landlord's risk is significantly reduced. This type of lease is common in multi-tenant commercial properties where common area maintenance costs are divided proportionally among the tenants.

b.) Gross Leases: Also known as a full-service lease, the gross lease typically involves the tenant paying one all-inclusive rent amount. This lease structure offers simplicity in financial planning for the tenant as they pay a single, flat rate.

The landlord then uses this rent to pay for all property expenses, including taxes, insurance, and maintenance. These expenses, therefore, become the landlord's responsibility, allowing the tenant to focus on their own operations without worrying about the operational aspects of the property.

This lease type offers more predictability for tenants since they're not directly responsible for the property's fluctuating operating costs. This can be particularly beneficial for startups or businesses that prefer a steady and predictable monthly expense.

However, the base rent in a gross lease tends to be higher as landlords estimate these costs and factor them into the rental amount. It is in the landlord's best interest to estimate high to cover any unexpected increases in these costs. Additionally, landlords may also factor in a margin for risk associated with potential increases in these costs over time.

As a result, while a gross lease provides more financial predictability for tenants, it may also result in higher overall payments compared to some net lease situations, particularly in cases where the operational costs are lower than the landlord's estimates.

c.) Modified Gross Leases: A modified gross lease (also known as a modified net lease) is a middle ground between a net lease and a gross lease. In this lease, the tenant pays base rent and some (not all) of the building's operating costs, which are usually agreed upon during negotiations. The split of expenses in a modified gross lease varies case by case. Some leases may stipulate that tenants are responsible for utilities and janitorial services, while others may require the tenant to cover insurance and property taxes.

This type of lease offers more flexibility and can be beneficial for both parties depending on the terms agreed upon. From the landlord's perspective, it provides a degree of security that some operating costs will be met by the tenant, potentially improving the property's overall profitability. For the tenant, while they have to pay some operating costs, they get the benefit of a lower base rent, and the responsibility of cost management can help encourage efficiency in their operations.

Knowledge of these lease types is not only crucial to comprehend who is responsible for what costs but also to analyze the lease's total cost over its term. A lease with a lower base rent but a triple net arrangement could end up costing more than a gross lease with a higher base rent but no additional costs. This underlines the importance of thoroughly evaluating all elements of the lease, not just the apparent base rent.

Furthermore, understanding these leases can help you negotiate better terms. For instance, in a tenant's market, you might be able to negotiate a modified gross lease where the landlord assumes more of the costs compared to a standard triple net lease. Knowledge empowers you to propose changes to the lease terms that could result in substantial savings or reduced risk.

Remember, lease terms can be complex, and it's essential to have a legal professional review the agreement. An experienced commercial real estate attorney can help interpret the terms of the lease, ensure there are no hidden costs, and negotiate favorable terms. They can bring attention to details that might otherwise be overlooked, highlight potential liabilities, and recommend modifications that better protect your interests. In addition, understanding these lease types can also help your communication with brokers, landlords, and other real estate professionals.

3.) Other Common Lease Types

a.) Percentage Rent Leases: This type of lease is commonly found in retail spaces, such as strip malls or shopping centers. Tenants under a percentage lease pay a base rent along with a percentage of their gross income. This arrangement aligns the interests of the landlord and tenant since both parties benefit when the tenant's business does well.

The percentage rent could be based on all gross sales or kick in only when sales exceed a certain threshold, a concept known as a "breakpoint." Breakpoints could be natural, where percentage rent is due after gross sales exceed the point where the base rent equals the agreed-upon percentage, or they could be artificial, which are agreed upon by the landlord and tenant and do not relate directly to the base rent.

The specifics of percentage rent often depend on the landlord's rental structure and can vary considerably. For instance, some leases may stipulate a lower base rent but a higher percentage of gross sales, or vice versa. In other cases, the base rent may be relatively minimal, with the majority of the landlord's income coming from the percentage rent.

In a vibrant location where businesses thrive, percentage leases can be highly profitable for landlords. Meanwhile, for tenants, especially startups and seasonal businesses, this kind of lease may provide flexibility, keeping their rental costs manageable during slower periods.

Like any lease agreement, percentage rent leases require careful scrutiny. Tenants should make sure they fully understand how their gross sales will be calculated and what exclusions may apply. Similarly, landlords will want to ensure that reporting requirements are in place to accurately track gross sales. Professional legal and financial advice is recommended for both parties in such arrangements.

b.) Land Leases: Land leases, or ground leases, are unique in commercial leasing. These leases may involve leasing a vacant parcel of land for a specific short-term purpose, like hosting a festival. However, more commonly, land leases involve long-term agreements, sometimes spanning decades. This provides the lessee with the opportunity to make significant investments in infrastructure and construction without the initial capital outlay required to purchase the land.

The tenant usually builds a structure on the land, maintains it throughout the lease term, and turns it over to the landlord at the lease's end. The lease agreement will often specify the standards to which the property must be maintained and the condition in which it must be returned, which may include stipulations about renovations or improvements.

These leases are attractive for tenants looking to avoid the cost of land purchase or seeking certain tax benefits. The tenant can often deduct their entire lease payment, providing a substantial tax advantage, and the landlord retains the flexibility to repurpose or redevelop the land after the lease term.

However, they can be complex and may pose concerns for lenders. Because the land is typically retained by the landlord, the tenant's investment in the property may be at risk if the lease is not renewed. Furthermore, obtaining financing for construction on leased land can be challenging, as lenders may be hesitant to provide funds for improvements on a property that the borrower doesn't own.

In any land lease agreement, it's vital that the lessee fully understand the terms, including any restrictions on land use, the responsibilities for property taxes, and the procedures at the end of the lease term. Both parties should work with knowledgeable legal counsel to ensure that their interests are adequately protected.

4.) Engage a Commercial Real Estate Attorney

A commercial real estate attorney plays an invaluable role in lease negotiations. They bring expertise in Michigan real estate law and industry practices, ensuring your interests are well protected. These professionals have the acumen and experience to decode the intricacies of real estate legal jargon and provide a clear, straightforward understanding to their clients, which can be crucial given the long-term financial commitments these contracts often involve.

From interpreting complex lease language to negotiating more favorable terms, an attorney's guidance can save you from potential legal pitfalls and unfavorable lease conditions. This is particularly true in the case of modified gross leases, percentage leases, or ground leases, where the specifics can substantially vary from case to case, making a one-size-fits-all approach inappropriate. The attorney can help tailor the agreement to match your specific needs, protect against unforeseen circumstances, and ensure a balance between risk and reward.

An experienced attorney can also help you understand your obligations and potential liabilities, such as maintenance responsibilities, rent escalation clauses, and termination conditions. They can negotiate terms such as lease renewals, rent increases, tenant improvements, and even exclusivity clauses that could impact your business.

Additionally, in complex lease structures such as land leases or when you are considering subleasing, an attorney's advice becomes crucial. They can guide you through the process, ensuring that your rights are secured and that you are not exposed to undue risk.

Finally, a commercial real estate attorney is also instrumental in dispute resolution. Should disagreements arise during the lease term, your attorney can advocate for your interests, using their knowledge of both the law and the specifics of your agreement to reach a fair resolution.

Therefore, whether you are a seasoned lessee or new to commercial leasing, the role of a commercial real estate attorney in Michigan, or indeed any location, cannot be overstated. By engaging their services, you better equip yourself to navigate the often complex terrain of commercial leasing.

5.) Letter of Intent

A Letter of Intent (LOI), sometimes referred to as a "term sheet," is a crucial step in commercial lease transactions. It's typically a preliminary, non-binding document that outlines the principal terms and conditions of a lease agreement. An LOI is typically drafted and sent by the prospective tenant to the landlord, although the landlord can also initiate this step.

The LOI provides a framework that guides subsequent, more formal lease negotiations. It helps both parties reach a mutual understanding of key lease terms before investing significant time and resources in drafting a full lease agreement. By establishing the foundational terms of the lease, an LOI can streamline negotiations and minimize misunderstandings down the line.

Key elements typically covered in a Letter of Intent include:

a.) Identification of Parties: The LOI should clearly identify who the landlord and tenant are. This may seem obvious, but it's essential in situations where the landlord or tenant is a business entity.

b.) Premises: The LOI should accurately describe the property to be leased, including its location, square footage, and any specific sections of a larger property.

c.) Term of Lease: The LOI should specify the length of the proposed lease term and any options for renewing the lease.

d.) Rent: The LOI should state the proposed rent and any rent escalations over the term of the lease.

e.) Tenant Improvements: If the tenant requires any changes or improvements to the property before moving in, these should be outlined in the LOI, along with who will pay for them.

f.) Other Essential Terms: The LOI can also cover other important lease terms, such as security deposits, maintenance and repair responsibilities, insurance requirements, and any unique terms or conditions applicable to the lease.

While a Letter of Intent is typically non-binding (except for certain provisions like confidentiality and exclusivity, if applicable), it's a document of significant importance. A well-drafted LOI can help ensure a smooth negotiation process and serves as a roadmap for the formal lease agreement.

Engaging a commercial real estate attorney at this stage can be very beneficial. They can help draft an LOI that clearly reflects your understanding of the agreement and protects your interests, setting the stage for a successful lease negotiation. Remember, an LOI is a critical first step in outlining the lease's fundamental terms, so it's important to ensure it accurately represents your intentions and expectations.

6.) Lease Agreement

A Lease Agreement is a formal, binding document that lays out the terms and conditions for the rental of a property. In a commercial context, it outlines the rights and responsibilities of both the landlord and the tenant, detailing everything from the rent payment terms to the permissible uses of the property.

The Lease Agreement expands upon the terms initially laid out in the Letter of Intent, providing a more in-depth and legally comprehensive description of the lease terms. Given its significance and binding nature, it's crucial that both parties fully understand and agree to the terms before signing.

Key components often found in a Lease Agreement include:

a.) Parties to the Lease: Just like in the LOI, the Lease Agreement should clearly identify the landlord and tenant. If the tenant or landlord is a business entity, it should be named correctly to ensure the agreement is enforceable.

b.) Leased Premises: The agreement should provide a detailed description of the property, including the physical address, square footage, and any specific areas included in the lease.

c.) Term and Termination: The lease term, start date, and end date should be clearly stated. Details regarding lease renewal options, if any, and conditions for early termination should also be laid out. Commercial leases typically last between 3-10 years. A shorter lease can provide flexibility, but landlords may be willing to offer more favorable terms for a longer lease.

d.) Rent and Other Costs: The Lease Agreement should clearly detail the rent amount, due dates, late payment penalties, and methods of payment. Additionally, it should specify other costs such as property taxes, insurance, maintenance costs, and utilities, and who is responsible for each. Understand how and when rent increases will occur. They could be a fixed percentage annually or tied to the Consumer Price Index (CPI).

e.) Use of the Premises: The lease should specify the permitted uses of the property. In a commercial lease, it's essential to ensure the use clause allows the tenant to conduct their intended business operations.

f.) Repair and Maintenance: The lease should spell out the tenant's and landlord's respective responsibilities for maintaining and repairing the property.

g.) Insurance and Liability: Details about insurance coverage requirements, liability for damage to the property, and indemnification provisions should be included.

h.) Default and Remedies: The lease should explain what constitutes a default, the cure period, and the remedies available to the non-defaulting party.

i.) Dispute Resolution: In case of disagreements or disputes, the lease should specify the agreed-upon method of resolution, whether it's mediation, arbitration, or litigation. What happens if you fail to pay rent or breach other lease terms? Are there grace periods or opportunities to cure the default?

j.) Subleasing and Assignment Rights: In uncertain times, having the flexibility to sublease or assign the lease can be critical for business survival.

k.) Improvement and Modification Rights: Can you make necessary alterations to the property? Who will pay for these modifications?

The lease length, rent increases, tenant improvements, and lease termination conditions can significantly impact your business. Analyzing these terms with a critical eye, and comparing them against your business plan and market norms, helps identify areas for negotiation. Remember, everything in a commercial lease is potentially negotiable, from rent payments to signage rights.

Given the complex nature and long-term implications of commercial Lease Agreements, it's wise to have a commercial real estate attorney review the lease. An attorney can help you understand the lease terms, identify potential issues, negotiate more favorable conditions, and ensure that your interests are well protected. It's always easier to address potential issues during lease negotiations than after the lease has been signed, when your options may be much more limited.

7.) Think Beyond Rent

Rent, undeniably, is one of the most critical aspects of any lease agreement. However, it's important not to get too fixated on this single factor. There are other elements within a lease agreement that can significantly impact your business operations and bottom line.

a.) Parking Accessibility: How easy is it for your employees, customers, or clients to park near your business location? If parking is a challenge, it can deter potential customers and inconvenience your team. Negotiating sufficient parking spaces, or even discounted rates in a nearby parking lot, can enhance your business's attractiveness and functionality.

b.) Tenant Improvement Allowances: This is a provision in which the landlord contributes financially towards improvements and modifications of the leased space to suit the tenant's specific needs. In certain businesses, the layout and interior setup can significantly impact operations. A generous tenant improvement allowance allows you to customize the space to your business requirements without bearing the entire cost upfront.

c.) Lease Flexibility: Business needs can change over time. Having the ability to sublease, the option for a lease extension, or even an early termination clause can provide your business with the needed flexibility. The ability to respond to changing business conditions could be more valuable than a slightly lower rent.

These are examples of factors that can deliver long-term value and potentially save your business money in the long run. They can also help to make sure the lease terms align with your business's growth plans. By considering these aspects in your lease negotiation, you can ensure your commercial lease supports not only your immediate operational needs but also your strategic business objectives.

Having a commercial real estate attorney by your side during these negotiations can be a valuable asset. They can help you identify and negotiate these and other aspects of the lease to secure a comprehensive agreement that serves your business's best interests.

8.) Due Diligence

In the world of commercial real estate, due diligence is of paramount importance. Prior to signing a lease agreement, a comprehensive examination of the property should be conducted to identify any potential issues or hidden defects. This exercise involves more than just a casual walk-through of the premises; it necessitates a detailed and professional inspection.

Engaging professionals, like property inspectors or engineers, can prove extremely useful in this scenario. They can help uncover issues that might not be readily visible to an untrained eye. These could range from structural problems within the building to potential compliance issues with local codes and regulations. The condition of the building systems, such as HVAC, electrical, and plumbing, should also be assessed. These systems can often be expensive to repair or replace and may affect the property's suitability for your business operations.

Understanding the condition of the property can impact your decision to lease, the terms of the lease, and the negotiation of a tenant improvement allowance. For instance, if the inspection reveals significant HVAC upgrades are needed, you can negotiate for these improvements to be made before occupancy or for a lower rental rate to compensate for future repair costs.

Moreover, due diligence isn't just about the physical aspects of the property. It extends to understanding zoning laws and whether your business activities are permitted in that location. You should also review the building’s certificate of occupancy to ensure it aligns with your intended use.

These findings can then be used as leverage in your lease negotiations, ensuring you don't end up with costly surprises after the lease has been signed. Remember, information is power in negotiations, and conducting due diligence provides you with the valuable information needed to secure the best possible lease terms.

9.) Frequently Asked Questions about Commercial Lease Negotiations in Michigan

a.) What is a commercial lease? A commercial lease is a legal agreement between a landlord and a business tenant. This contract sets out the terms and conditions under which the tenant can use the commercial property for their business operations.

b.) What are the primary types of commercial leases in Michigan? There are several types of commercial leases, including net leases (single net, double net, and triple net), gross leases, modified gross leases, and land leases. The lease type determines who is responsible for costs such as property taxes, insurance, and maintenance.

c.) What is the role of a commercial real estate attorney in lease negotiations? A commercial real estate attorney helps interpret the lease language, negotiate terms, and ensure there are no hidden costs or potential legal pitfalls. Their expertise in Michigan real estate law is invaluable in protecting your interests during lease negotiations.

d.) Why is due diligence important before signing a commercial lease? Due diligence involves thoroughly examining the property and its terms before signing the lease. This can help identify any potential issues with the property, providing leverage during negotiations, and preventing future legal or financial complications.

e.) What factors should I consider beyond rent in a commercial lease? Factors beyond rent to consider during negotiations include parking accessibility, tenant improvement allowances, and lease flexibility. All these elements can influence the long-term value and suitability of the lease for your business needs.

f.) How can I engage in successful commercial lease negotiations in Michigan? Successful lease negotiations require an understanding of the market, familiarity with lease types, strategic thinking beyond the rent amount, and conducting thorough due diligence. An experienced commercial real estate attorney can be invaluable in this process.

g.) How can I schedule a consultation with you for my commercial lease negotiation in Michigan? You can schedule a free consultation by visiting our website or contacting us directly via phone or email. We're ready to help you navigate your commercial lease negotiation.

10.) Commonly Misunderstood Clauses in Commercial Lease Agreements

a.) Rent Escalation Clause: This clause allows the landlord to increase the rent at specific intervals. The terms can be confusing as the increase could be tied to various factors, like the Consumer Price Index or the building's operating costs. It's crucial to understand how, when, and why your rent may increase over time.

b.) Common Area Maintenance (CAM) Costs: This clause typically appears in net leases and refers to the costs for maintaining common areas like lobbies, bathrooms, parking lots, and other shared spaces. Tenants should thoroughly understand what's included in CAM costs as they can significantly add to the lease's total cost.

c.) Repair and Maintenance Responsibilities: Some leases make tenants responsible for specific repair and maintenance duties, like HVAC maintenance or structural repairs. It's crucial to clearly understand your repair and maintenance obligations under the lease.

d.) Sublease and Assignment Clause: This clause governs whether and how a tenant can sublease the space or assign the lease to another party. Restrictions or allowances for subleasing or assigning the lease can impact your flexibility to adapt to future business changes.

e.) Default and Remedies Clause: This clause specifies what constitutes a default (or breach) of the lease and what remedies are available to each party. The definitions and remedies can be complex and may heavily favor the landlord unless carefully negotiated.

f.) Personal Guarantee: This clause makes the individual(s) who sign the lease (usually business owners or executives) personally responsible for the lease obligations if the business cannot meet them. This can be a significant liability and should be clearly understood.

g.) Force Majeure: This clause can absolve the landlord, the tenant, or both of their obligations under certain unforeseeable and uncontrollable circumstances like natural disasters, war, or pandemics. The specific terms of force majeure clauses can greatly impact your business continuity and financial obligations in crisis situations.

These clauses highlight the importance of engaging a commercial real estate attorney who can help you understand and negotiate the terms of your commercial lease. Remember, it's crucial to fully understand each clause in your lease agreement - it not only impacts your monthly costs but also your legal rights and responsibilities as a tenant.

11.) Hypothetical Scenarios in Commercial Lease Negotiations

a.) Scenario 1 - Opening a Retail Store in Grand Rapids: Suppose you're looking to open a retail clothing store in a popular shopping center in Grand Rapids, Michigan. You're offered a lease with a base rent that seems reasonable, but it includes a percentage rent clause. It's vital to understand how this percentage is calculated and when it kicks in. Remember, a seemingly attractive base rent can quickly inflate with percentage rent, especially during high-sales months.

b.) Scenario 2 - Opening a Tech Startup Office in Ann Arbor: Imagine you're starting a tech company in the thriving tech hub of Ann Arbor, Michigan. You find a modern office space perfect for your needs. The lease is a triple net lease, and as a tenant, you're responsible for all operating expenses, including maintenance costs, insurance, and property taxes. These costs can fluctuate, making your monthly expenses unpredictable. It's crucial to have a clear estimate of these expenses before signing the lease.

c.) Scenario 3 - Leasing a Warehouse in Detroit: You're expanding your manufacturing business and need additional warehouse space in Detroit, Michigan. The landlord offers you a gross lease, where all property expenses are included in the rent. However, the lease also contains a rent escalation clause tied to the Consumer Price Index. Understanding how this index may affect your future rent increases is critical for budgeting your long-term expenses.

d.) Scenario 4 - Starting a Restaurant in Lansing: You've found the perfect location for your new restaurant in downtown Lansing, Michigan. The landlord presents you with a land lease agreement, which means you'll be responsible for building the restaurant structure. You'll need to account not only for the cost of construction but also the complexity of this lease type. A qualified real estate attorney can help you navigate these complexities.

e.) Scenario 5 - Opening a Boutique Hotel in Traverse City: Consider you're opening a boutique hotel near the beautiful shores of Lake Michigan in Traverse City. The property is on a land lease, which means you will build and maintain the hotel building, while the land remains in the landlord's ownership. Being aware of the specifics of a ground lease and understanding your obligations towards property maintenance, and end-of-lease implications is paramount for your hotel's profitability and longevity.

f.) Scenario 6 - Establishing a Health Clinic in Sterling Heights: You're a healthcare professional planning to set up a new clinic in Sterling Heights, Michigan. The landlord offers a modified gross lease, meaning you'll pay the base rent and share some of the operating expenses. It's important to understand which operating costs you'll be responsible for and negotiate them effectively to ensure your clinic can operate sustainably.

g.) Scenario 7 - Starting a Coffee Shop in Flint: You're starting a coffee shop in downtown Flint, Michigan, and you're presented with a lease that includes a continuous operation clause. This clause requires your business to remain open and in operation for specific hours. It's critical to comprehend the implications of this clause, particularly in unforeseen circumstances like renovations or public health crises.

h.) Scenario 8 - Leasing Office Space for a Tech Firm in Kalamazoo: You're looking to lease an office space for your tech firm in Kalamazoo, Michigan. The lease agreement includes an exclusivity clause, ensuring that the landlord won't lease other premises in the same building or complex to your direct competitors. Understanding such clauses is crucial for maintaining your competitive edge in the bustling tech industry.

These scenarios highlight the importance of understanding and negotiating lease terms. Whether you're in Grand Rapids, Ann Arbor, Detroit, or Lansing, a knowledgeable commercial real estate attorney can guide you through the process, ensuring your lease supports your business's growth and success.


Navigating commercial lease negotiations in Michigan doesn't have to be an overwhelming process. By understanding the market, familiarizing yourself with lease types, engaging a professional attorney, scrutinizing lease terms, and performing due diligence, you can set yourself up for a successful negotiation.

Remember, a commercial lease is more than a contract; it's the foundation upon which your business will grow and thrive. So, take the time to get it right.

Need professional assistance to guide you through your commercial lease negotiations in Michigan? Don't hesitate to reach out to us for legal representation and support. Schedule a free consultation today! Let us help you navigate the complexities and secure a lease that supports your business's future growth.

DeLone Dawisha

Principal and Founder

Dawisha Law, PLLC



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