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A company's success is heavily impacted by their commercial property location, terms and price. As a business owner looking to rent out a new office space, will need to sign a commercial lease that allows your business to operate profitably. If you struggle to make payments, it could impact the financial health of your business and personal life. After all, breaking a lease could create further complications down the road. Prepare yourself beforehand by getting a professional lease review service and learning the top things to consider before leasing commercial space.
One of the most crucial things to consider before leasing commercial space is your neighbors. The typical business owner focuses solely on the office or retail premises itself.
They neglect the outside factors that could negatively affect their business. If you move into a commercial space that neighbors another business that offers similar services, you could lose customers.
In contrast, you could gain more customers if your neighbors bring you excessive amounts of foot traffic. In this case, you should request a co-tenancy clause in your lease.
That way, you have the right to break the lease if your traffic-driving neighbor relocates. Keep your neighbors in mind when reviewing your commercial lease.
Business owners also need to consider CAM (common area maintenance) terms before leasing commercial property. Landlords often try to charge more through maintenance fees.
Small businesses pay more when landlords alter their maintenance fees depending on how many offices are vacant in their buildings. If you want to get the best deal possible, ask your landlord or listing broker how they establish maintenance fees.
If it is not based on the percentage of the commercial building that you plan to rent, you need to negotiate. Take the time to review your CAM terms before leasing a commercial space.
Moreover, look into the improvement cost terms in a lease before signing it. Typically, landlords pay for several improvements that business owners need done to their spaces and then roll the expenses into the tenants' rents.
When landlords operate this way, tenants are often caught off-guard.
Therefore, you need to speak with your potential landlord about their improvement cost structure.
You might be able to negotiate based on the current state of your office and term of the lease. Then, you can reduce your potential move-in or start-up costs. Inquire about these expenses before signing a lease for commercial space.
The best commercial leases contain good dispute resolutions. When business owners sign leases that do not include resolution options, they end up facing overwhelming litigation costs. To avoid dealing with the stress and costs of a lawsuit, ensure that your lease contains good dispute resolutions.
Popular options include mediation and arbitration in place of court proceedings. The difference in mediation and arbitration lies in the third party's ability to make decisions. Mediators work with landlords and tenants to come to common terms. They do not make decisions for their clients like arbitrators do. Satisfied business owner tenants consider dispute resolutions before leasing commercial property.
In addition to the above things to consider before leasing commercial space, review the sublease terms. Landlords sometimes leave this clause out of their leases completely. However, business owners benefit from subleasing their commercial spaces for numerous reasons.
For instance, business owners who cannot afford their rent can minimize it without falling into debt by subleasing their space. When companies expand, owners often turn to subleasing as a way to avoid breaking their lease. Then, they can relocate and continue to grow without having to pay unnecessary, large fees. You need to consider this factor before leasing commercial property to prepare for both business loss and growth.
Business owners' commercial leases can either drive them toward their goals or push them further away from them. With that being said, you need to consider several factors before signing on the dotted line.
Firstly, you need to take a look at your potential neighbors and determine how they might affect your business traffic. Then, examine the CAM terms in your lease, making sure that the fees are based on the percentage of the property you are renting. Inquire about the improvement costs and negotiate when necessary.
Good dispute resolutions can save tenants and landlords both substantial amounts of capital when they allow them to avoid court proceedings entirely.
Finally, you can prepare for business loss and expansion by gaining the ability to sublease your office space. If you take these things into consideration before leasing commercial property, you can set yourself up for success.