Why start-ups break commercial leases

On Behalf of | Dec 27, 2019 | Commercial Real Estate Leases |

When you start your business, you know it’s not time to buy a property. This is a start-up. It’s not a proven business model. You hope it lasts for decades or even generations, but you don’t yet know how successful you’ll be. You opt to rent a commercial space to get things off the ground.

You sign that commercial lease, honestly believing that you will follow the terms, and you will not need to break it. However, these breaks do happen. Business owners need to know how and why to get out of a lease early when it no longer suits their needs. This is especially true for start-ups, as the early years can be fairly volatile. Here are four reasons it may happen:

  1. Your company is even more successful than you hoped. You quickly need more space to expand, and that’s just impossible under your current lease.
  2. The location just is not right. Maybe you thought you’d get a lot of foot traffic, but it’s not happening. Maybe you didn’t realize how far the commute was for the members of your workforce, and it’s causing a lot of turnover.
  3. You started with too large of a space. Things haven’t gone as well as you’d hoped or you simply learned that the space wasn’t what you needed. You want to downsize to a smaller, less expensive property.
  4. You have problems with your landlord. They’re breaking the lease or failing to provide you with the space and services you thought you were paying for.

No matter why you need to break the lease, make sure you know exactly what legal options you have.