Tips for tenants leasing office or retail space

| Nov 4, 2020 | Commercial Real Estate Leases | 0 comments

You may find that your home business has outgrown the kitchen table. Perhaps you are ready to launch your boutique or coffee shop. To meet your needs, you may want to lease space in an office building or shopping center.

Forbes offers tips for companies wishing to lease commercial space.

Know your true lease costs

Your landlord may charge amounts over and above your base rent, and you must take these amounts into account as you plan your lease budget. Your lease may require that you pay percentage rent, common area maintenance expenses, management costs, insurance or even advertising. In some cases, the landlord may pay for items such as utilities or custodial services but then pass the costs through to you and other tenants. Take the time to understand how the landlord will calculate your share of property expenses.

You may find yourself with a surprise bill if the heat fails in the middle of winter. When you negotiate your lease, ask your landlord about a cap on your expenses or warranties that may cover major repairs.

If you anticipate the need to build out your space to suit your business, ask your landlord to help fund your tenant improvements.

Know the fine points of your lease

Do you have a grace period for paying rent? If a water pipe bursts and you are unable to use your space for a week, can you withhold rent? If you do withhold rent in such a case, may the landlord assert a lease default? Understand your rights and obligations under the lease agreement.

As you negotiate with your landlord, think about both your current needs and future plans. If you plan to grow your business, could the building accommodate your expansion? If you plan to expand or stay at the location for the long-term, consider how your rent may change over time.