Whether your business is just getting started or you’re established and ready to expand, one of the biggest decisions you have to make is finding commercial space for rent. The location and quality of the facility that holds your business can literally make or break it.
When you’ve found the ideal retail space for your business, the next step is negotiating a lease that your business can thrive in. It might feel daunting to even review the entire lease, let alone negotiate it, but just agreeing the stipulations that are offered in a lease could hurt your business in the long run. Here are a few tips for making sure the conditions of your commercial lease favor your business:
- Negotiate the Length of the Lease to Suit Your Business. Consider the long-term plan for your business and decide how long it will be beneficial to stay at that location. Experts recommend that new businesses negotiate a 12 to 24 month lease and include an option to renew. When you’ve agreed on terms, also negotiate rent increases in the case of a renewal. Your business may experience hardship if, at the end of your lease, your only option is to renew with a rent hike you can’t afford or to move.
The property owner will likely negotiate the terms you request, but you can use that to your advantage. If you ask for a 12 month lease and they want a 36 month lease, they might make concessions in other lease stipulations if you agree to longer terms.
- Ask About Hidden Fees. Your commercial lease probably includes fees beyond just the rent. Commercial space for rent often include fees for upkeep in shared areas, security fees, and utility fees. Ask how these fees are calculated – will you be expected to pay the same amount as a large retail space for rent in the same complex? Are these fees appropriated by usage or square footage? You can get an idea of the extra expenses your business might incur by asking what past tenants have had to pay.
- Make Sure You Understand Your Responsibility for Maintenance In the Lease. While residential leases usually expect the property owner to cover maintenance and repairs for their facility, many commercial leases stipulate that the tenant is responsible for upkeep. Some leases put the entire maintenance burden on the tenant, while others have specific obligations of the renter, such as plumbing repairs or air conditioning. Sometimes you can add a maximum dollar amount for maintenance that the renter is responsible for.
- Consider Adding Clauses to Safeguard Your Business. Sometimes the renter has some leeway to add conditions into the lease that a property owner must abide by with their commercial space for rent. Consider adding clauses that the surrounding space cannot be rented to direct competitors, a guarantee that an “anchor tenant” will be replaced with in a certain time frame if that is a leading cause for traffic in the area, or that you’d be allowed to sublet the space if your business needed to relocate earlier than the terms of the lease.
Have you ever negotiated the stipulations in a retail space for lease? Please share your experience in the comments!