Two basic deal types make up the bulk of my commercial real estate practice. We help clients transfer ownership of commercial real estate (purchase and sale agreements) and we help transfer possession of commercial real estate (commercial leases, easements, license agreements). While complexity of deal structure varies, I've basically spent the last 22 years negotiating hundreds of purchase and sale agreements and commercial lease agreements. In the beginning, I was trained on all manner of commercial leases: telecom tower leases, office leases, industrial storage leases, ground leases, restaurant leases and all manner of retail leases. Honestly, at first I viewed leasing work as pretty tedious; I was fresh out of law, school and very keen to work on purchase and sale deals. With purchase and sale deals, the dollar amounts involved are larger (at least on their face), the property involved is often more complex, and the deal structures can be very complex, involving multiple parties, entities and numerous interweaving documents, not to mention numerous interweaving pre-closing and post-closing obligations. contrast that to a commercial lease, which really involves only one document, at least, as far as attorneys are concerned, and after a commercial lease is signed the attorney may not hear about the property again until the term ends, unless something goes sideways or modifications to the deal are needed. But even these days, and in these market conditions, negotiating a commercial lease with a top-tier landlord can take a month, and sometimes even two.
Over the years, I've come to appreciate the commercial leasing practice much more. Purchase and sale agreement deals tend to be cyclical; that work is not as plentiful when the economy is trending downward. There is, however, always commercial leasing work to be done. Businesses lease office, storage and operations space; they amend leases to shrink or expand the leased premises, increase or decrease the lease term, modify other terms, and sometimes, even terminate the lease agreement early. Restaurants and retailers often expand pursuant to quarterly or annual campaigns. When businesses (and commercial properties for that matter) are sold, leases are assigned to the new owner. Landlords (and their lenders) frequently request subordination agreements as well as estoppel agreements from tenants in connection with financings and/or sales and these agreements warrant close scrutiny to save tenants from undesirable consequences.
Earlier in my career I represented more landlords but these days I represent more tenants than landlords. From large retailers and restaurant chains to franchisees and smaller mom-and-pop businesses, there is almost always leasing work in my queue. One thing that has been consistent, often, to my amusement, is the characterization of the work by the uninitiated as "simple" and something that should be "easy" to complete and quickly, of course! Over the years, I've come to see it as anything but. From my vantage point it's certainly arguable that even a relatively simple commercial lease document - let's say for 1500 ft.² of studio space – involves as much, if not more complexity than a simple commercial sales agreement for the same 1500 square-foot yoga studio. After all, the leasing document is intended to govern the relationship between the parties going forward in time often for a significant term of years. This is different than the sales agreement which typically (but not always) is limited to the relationship between the buyer and the seller from the date of the contract through a closing date. It's difficult to accurately compare the two types of transactions because they differ in so many ways. But make no mistake, a commercial lease agreement can be every bit as complex as the PSA.