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Top 10 Commercial Leasing Tips

Top 10 Commercial Leasing Tips

If your business can’t afford to own its own premises, you might be thinking of getting a commercial lease instead, which will become a huge investment for you. That is why it is good to perform due diligence to get the best deal for yourselves. Just remember that any real estate lease agreement is designed to favor the landlord since the landlord is the one who prepares it. Read the following ten tips to find out how much negotiating power you have when it comes to commercial leases.

commercial leasing tips

Read the Lease

Reading and understanding the lease in detail is a must. You can even hire the services of a professional lawyer or agent to look into the agreement on your behalf to ensure that there aren’t any hidden clauses contained in the agreement.

Term of the lease

You may have more negotiating power if you plan on staying long-term since those are the kind of tenants that landlords prefer. Just don’t get roped into a very long lease agreement if the future of your company is likely to change.

Permitted Use of the Premises

Can you sublet the premises or not? You might want to negotiate to include something like this in what is considered to be permitted uses of the premises. This way, the lease becomes flexible enough to accommodate any changes that come should your business decide to broaden its horizon.

Hidden Costs

Sometimes rent is not the only expense that you can incur in a commercial lease agreement. There might be additional fees involved such as repairs, maintenance, and utilities. Find out how these costs get calculated, so you don’t end up paying more than you should.

Maintenance and Repairs

Commercial lease agreements vary in this area compared to residential leases, which place the burden of maintenance and repairs on the landlord. A commercial lease might require you to cover all the costs of upkeep yourselves, but you may negotiate to only cover certain repairs, like electrical or air conditioning.

Subletting and Assignment

Mergers or acquisitions happen to companies. So your commercial lease should allow you to sublet or assign some space when the need arises.

Tenant improvements

Make sure to negotiate a lease that allows you to make alterations or modification to the premises with the permission of the landlord.

Returning Premises to Original Condition

Check if the lease states that the premises should be returned to their original state when you decide to leave.

Favourable Clauses

Negotiate some clauses that don’t leave you stuck with a useless lease. For instance, a co-tenancy clause should allow you to terminate the lease should a tenant that provides you with a lot of business (anchor tenant) leaves the premises.

Defaulting the Lease

If you default the lease, instead of paying the full amount agreed upon in the lease, you can negotiate to pay half or one month’s rent instead.

Now that you know the best tips for a commercial leasing tips, you can negotiate with confidence, knowing you did your homework. A commercial lease is a huge part of your business. A bad agreement can leave you at a disadvantage, but a good one can contribute to your success.

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