Tips on leasing a commercial space

leasing commercial space

Tips on leasing a commercial space

Commercial leases can be complex and stressful. The landlord is constantly looking to maximize revenues, while the tenant is looking to cut expenses. Each wants to negotiate the lease in a way that benefits them. Below are some tips to keep in mind while negotiating a commercial lease.

1. Verify that the leasing agreement contains all necessary provisions.

When looking at commercial properties for lease, verbal and written agreements are two very different things. Basic terms like rent amount, rent due date, and the length of the given lease should always be included.

2. The leasing agreement should specify the breakaway cost.

Find out the terms of your future landlord’s lease termination policy. You don’t enter into a lease with the intention of breaking it, but it’s important to have an out clause to protect yourself. The out clause may include restrictions on subletting or a predetermined cost.

3. Work with a commercial real estate broker.

You should hire a reputable broker to find and negotiate a lease. Good and reliable brokers can usually help negotiate better terms for their clients.

4. Add additional terms to your commercial lease.

A contract should be complete with nothing left up for discussion at a later time, and the lease must address all potential issues. Make sure you include additional clauses like insurance requirements, operating hours, and a sublease clause in the lease because it will likely play a significant role in your company’s success. Watch out for demolition provisions. These clauses demand that the tenant foot the bill for pricey upgrades like the roof or the parking lot.

5. Negotiate for the removal of unfavorable terms.

The goal of negotiation is to find common ground. Negotiate the terms of your lease with the intention of reaching an agreement.

6. Take advice from your prospective neighbors and avoid competition.

A radius clause prevents your landlord from renting neighboring spaces to competing businesses. Also, consult your neighbors before making a commitment. Find out what to expect from the owners and the community.

7. Discover whether there are any standard maintenance costs.

Depending on the location, you may be charged common maintenance fees. Therefore, it’s crucial to be aware of these unstated expenses. The lease agreement should specify who is responsible for paying the common area maintenance fee.

8. Calculate everything before you sign your lease.

Sometimes tenants sign the agreement without carefully reading it through. This is one of the worst things you can do. Make sure to calculate everything and confirm that each calculation corresponds with the terms in the contract. Bring up any differences you find and negotiate.

9. Don’t be afraid to walk.

Until the lease is being negotiated, you never know what your landlord wants or needs. If you think your landlord is being unreasonable or the conditions don’t suit your needs, don’t be afraid to walk away from the deal.

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