While many small businesses are started in the homes and garages of founders, a business’ growth and success often necessitates expansion into a larger commercial space. When it comes to commercial real estate, location is paramount and can either positively or negatively impact a business’ ability to attract employees and customers alike.
The search for the perfect future home of one’s business can take months and, once they’ve finally found the perfect location, most business owners are eager to sign a lease. There are, however, several important issues that must be investigated, considered and negotiated when entering into a commercial real estate lease.
In addition to ensuring that monthly rent is affordable, business owners are also advised to ensure the duration of a lease provides flexibility. For example, rather than agreeing to sign a five-year lease it may be wise to negotiate a one or two year lease with the option to renew for the same price.
Issues related to building expenses, general maintenance and repairs must also be considered when negotiating a commercial lease. For example, many leases include fees for maintenance with regard to the general cleaning and upkeep of common areas. For a business owner, it’s important to understand any and all fees that apply to a lease and to ask questions related to how such fees are determined.
Issues related to who is financially responsible for the maintenance and repair of a commercial space should also be clearly outlined in a lease. Some leases may stipulate that individual tenants are responsible in which case it’s important to understand what exactly that means and the possible financial implications related thereto.
For a small business owner, negotiating a commercial loan can be a daunting and confusing process. It’s advisable, therefore, to consult with an attorney who handles commercial real estate matters and who can advocate on one’s behalf and ensure the terms of a lease serve to further the best interests of both a business owner and business.
Source: SBA.gov, “6 Tips for Negotiating a Commercial Property Lease without Getting Burned,” Aug. 12, 2011