Tips on How to Lease a Commercial Property
Leasing commercial property should be a significant event for most people because of the financial liability they are incurring once the lease is signed. Like buying a house it is a major investment. Therefore it is important to consider carefully why and how to lease a commercial property.
Obviously the 'why' is because you want to start, relocate or expand a business. The 'how' is the process of negotiating a lease that provides you a new location and also protects your interests.
Once you have found the right site or location and made sure that the location conforms to prudent operating needs you need to consider the lease terms. When people ask me how to lease a commercial property in addition to making sure the financial terms were viable I caution them to consider what will happen if they need to get out of the lease. Landlords usually frown upon this but there are instances when your contract with the landlord will have to be modified.
Most people are so focused on the opportunity to open a new location. In their quest they don't always consider the prospect of having to get out before the end of the lease. Business is a risky endeavor. There are many things that can and do go wrong. Therefore it is important to provide some safety measures to protect you against the need to terminate the lease.
If you mismanage your business or otherwise cause your own demise, it is not reasonable to expect the landlord to graciously allow you to terminate the lease. You have entered into a contract and the landlord has relied on you to perform through the full term. That said, if the landlord fails to do some things that directly impair your business, then you should have some rights to protect your interests. These are points that should be negotiated into a lease before you sign and while you still have some leverage with the landlord.
Adequate Parking - If your proposed use of the space is dependent on readily available parking for your customers make sure you provide for an adequate number of spaces around your location. Equally important, you may want to provide that the landlord may not lease space within a reasonable distance to a user that consumes an inordinate amount of space for long periods of time. These uses include such uses as fitness centers and theaters.
Co-Tenancy Issues - If your use is vulnerable to competitors, you may also want to provide that the landlord cannot lease to a direct competitor within a certain distance. Many tenants require this protection but within the center of which they are a part. The problem with that is that landlords are in the business of developing properties and may build other centers within your immediate trade area. Try to expand your protection right to adjacent properties within your primary trade area.
Dependency on the Center - If your use is dependent on the traffic being generated to the center then it is smart to seek protection from the center having too high a vacancy rate or losing a major draw either of which can reduce traffic to the center demonstrably. Also, a new center is always attractive and appealing. But what would happen if the landlord failed to maintain the center and the parking lot. If things fall into disrepair it may have a direct impact on your business. Try to provide that should the landlord fail to maintain the center in a fashion that impacts your sales you have the right vacate or withhold rent until the issues are corrected.
With these safeguards in place the rest is up to you to do your best to build your business and service the lease. Knowing how to lease a commercial property is an important part of being in business. Knowing how to provide for future uncertainties enables you to stay in business.