Signing a commercial lease is one of the biggest steps in a business owner’s entrepreneurial journey. While leasing a commercial space might sound intimidating, it really doesn’t have to be daunting, as long as you know what to look for beforehand. If you are ready to take the leap and help your business grow into a successful venture, you’ve come to the right place.
In this post, we will share some helpful leasing tips for first time commercial tenants that should be considered before signing a commercial lease.
Read the Entire Lease and Ask for Clarification
One of the best pieces of advice you will ever receive as a commercial tenant is this: read the entire lease before signing it. Yes, you do need to read it—every single page. While this is definitely a tedious task and if we’re being honest, quite a boring one at that, it is so important. Why? Well, because when you sign a commercial lease, you are signing a legally binding document and once you sign it, that means you are agreeing to everything the document lays out – everything. So, if you don’t read what you’re signing up for, it can and likely will cost you (big time).
On a similar note, be sure you know what you’re obligated to do under the lease’s terms. If you do not understand the lease terms or language, ask for clarification before signing it.
Consider the Length of The Lease
Another important thing to consider before leasing a commercial space is the length of the lease. Short-term leases of just a few years can be advantageous if you’re hesitant to commit to a longer-term agreement. However, long-term leases can prove to be more beneficial for others. Whether you decide to go with a short-term or long-term lease, this decision should be based on your specific business needs.
Negotiate Terms
When you’re presented with an initial lease, your potential landlord may tell you that it’s standard and act as if every other tenant simply signs without any discussion. Don’t be fooled by this practice. This does not mean that it’s a done deal. You have the right to negotiate the lease terms, so don’t be afraid to ask questions, consider your business, and negotiate. Aside from the monthly rent costs, consider negotiating items such as parking, signage, and the build-out costs for any necessary improvements. Remember, until the lease has been signed by both parties, the opportunity for negotiation is not over. Consider making a list of all the provisions you would like to revise as you’re going over the lease. Then send the list to your potential landlord. You might be surprised by how much they’re willing to change.
Seek Advice
Remember that this is a business transaction. Leasing commercial space requires knowledge and expertise, so just like any other area of business, it’s a good idea to seek professional advice – from both legal and business perspectives before committing. Until you’ve been through the process a few times, it’s a good idea to involve professionals in the process (examples: a trusted lawyer, consultant, lender, or realtor).
Some vital areas they can help you navigate include (but are not limited to):
- Lease Term/Type
- Rent Costs
- Security Deposit
- Maintenance and Renovations
- Insurance
- Subleasing
- Amendment/Modification
- Termination
