Commercial documentation can be intimidating, and the last thing you want is to lock yourself into a bad deal. Commercial leases are no exception: they vary significantly from residential leases and often require the eyes of an attorney before signing.
Educating yourself on the basics can go a long way if you’ve never signed a commercial lease before. Before signing a commercial lease, consider the following.
The Process of Obtaining a Commercial Lease
A commercial lease is an agreement between a property owner and a tenant. It clearly dictates things like:
- Who is responsible for paying what
- When they’re responsible for paying for it
- Who provides insurance on the property
This is different than a residential lease, which usually contains more legal protections for the tenant in the form of rent control and habitability. Residential leases are also generally shorter in length.
To start, you’ll need to find a suitable location to house your business. Location, proximity to employees, and price can all play a major role when looking for the perfect building. A full-service commercial real estate brokerage can help you narrow your search.
There are several different types of commercial leases. Some business owners might want a full-service lease, in which they pay the rent, and the landlord of the building pays for utilities and other expenses.
Another option is a single, double, or triple-net lease, in which tenants pay some of the operating costs of the building. Depending on the type of lease, the tenant may have additional responsibilities, like paying for utilities, maintenance fees, property taxes, and more.
What to Consider Before Finalizing Your Commercial Lease
There are several things you need to take into account before putting pen to paper. Before signing the dotted line…
Getting caught up in the excitement of signing a lease can be easy without fully understanding what you are agreeing to. Always ensure you have a full understanding of your company’s financials, as well as an idea of where your business’ future lies, so you don’t get wrapped up in a lease you ultimately cannot afford.
Always make sure you’ve chosen an appropriate lease for your business. If you plan on staying at this property for a long time, a longer lease might be suitable. If rent is projected to rise in the future, a one or two-year lease might be a better option.
Review Your Lease’s Clauses
Some of these clauses can have major impacts on the lease; for example, a co-tenancy clause allows you to break the lease if a large anchor tenant departs. Pay especially close attention to clauses that identify who is responsible for property repairs, as well.
There are several negotiation tactics you can employ when discussing the terms of your lease:
- Research the rent prices of comparable properties in the area
- Push for clauses that allow you to sublease the property and block similar businesses from leasing the property, as well
- Look for a one to two-year lease that does not lock you in for a long period of time
- Make sure that you have a favorable termination clause
Find the Right Commercial Space with CRS’s Tenant Representation Services
Navigating the process of signing a commercial lease is difficult, but trying to do it all on your own can make the process seem almost impossible.
Commercial Realty Solutions is here to help. CRS is a full-service commercial real estate brokerage with excellent tenant representation services. Our team of experts can help you find the best commercial space and assist you with lease negotiations.