6 Things to Consider When Leasing a Commercial Property
In the US, many businesses, especially startups, lease a commercial property because it offers many benefits, such as flexibility and minimal liability. It also does not require down payments, which is a big help for business owners who don’t have enough funds.
If you’re also planning to start your own business and you’re looking for a commercial property for lease, you should know how to choose the right one. To help you, here are the things you should consider before signing a commercial lease contract:
- Location of the Property
When looking for a commercial property for lease, you should make sure its location is perfect for your business. Ensure that the setting of the property can significantly boost your company’s long-term performance.
Consider checking how many potential customers, as well as competitors, are in the area. If you think the location of the property isn’t right for your business, or if you have plenty of competition, you may want to start looking for another property to lease.
- The Landlord or Building Owner
When leasing a commercial property, remember that you are entering a business partnership with the landlord or building owner. This is why you should also try to get to know them better. Find out how good they are in paying the mortgage.
Even if you’re on time with every payment, but your landlord always fails to make mortgage payments, you could end up getting evicted in the event of foreclosure. To find out more about the property owner, you can conduct a public-records search and request documents related to the landlord’s limited liability company.
- Duties and Responsibilities
Before signing the contract, make sure that the duties and responsibilities of both parties are clear. As much as possible, the contract should specify what you are and aren’t required to do.
Repairs and maintenance, for example, can be very expensive, so you should try to negotiate terms that are fair for both parties. If you can, you should also hire a lawyer to review the commercial lease contract before signing it.
- Rent and Security Deposit
Whether you’re starting a new business or relocating to a new place, the cost of doing either is already expensive. So, you would want to make sure that the rent and security deposit of the commercial space is affordable for you.
Also, aside from your monthly rent, there may be additional charges, such as property insurance and late payment fee, which you have to pay. Depending on your contract, your landlord may ask you to pay for the insurance. Just make sure that you know exactly how much you’re paying each month and for what.
- The Length of the Lease
One of the first things you should determine before renting a commercial space is whether it’s going to be a short-term or long-term lease. If you are opening your business in a growing or emerging area, then a long-term lease may be perfect for you.
However, if you want to have the flexibility to move your business to other locations whenever you want to, then you should consider a short-term lease. Some business owners usually go for a short-term lease when they want to test their market in certain locations.
- Insurance
Your lease term should clearly state your insurance obligation. In most cases, your landlord’s insurance does not cover your business equipment, furniture, and other belongings. This is why you may be required to obtain insurance, such as liability policies. You can ask your insurance agent to review the policy provisions within the lease to ensure that you and your business are protected.
Choose Wisely!
There are plenty of commercial spaces out there for you to choose from. So, it can be really hard to decide which one is best for you. Sometimes, business owners would choose whichever provides the lowest monthly payment or security deposit.
However, the rent isn’t the only thing you should consider. To ensure that you chose to lease the right commercial property for your business, keep in mind the things listed above. In case you need more guidance, feel free to seek advice from your commercial real estate attorney as well.