According to Steven Taylor of Taylor Equities, if you are thinking about renting a commercial property, there are many
things to consider before you sign a lease. The commercial real estate
landscape comes with many complications and isn’t as straightforward as renting
a residential space. To find the right property, you will need to understand
the factors that will affect your lease term.
Here are a few things to consider when renting commercial properties:
- Choose
the right location
Before deciding to rent a commercial property, it is important to research
the neighborhood and understand the market. Is this location a prime area for
your business? Pay close attention to street traffic, noise levels, economy
changes, and customer behavior in nearby businesses. Does the area have ample
parking? Will employees and customers feel safe and secure? Is the building
accessible to your manufacturers and suppliers? Taking the time to ask the
right questions can save you time and energy in the long run.
- Agree
on rent and tenure
Once you have chosen a property, you will need to agree on rent and
tenure. Many renters don’t realize that a lease is negotiable. Don’t be shy
when researching properties - to ensure you get the best deal you will need to
discuss and negotiate the lease terms with the landlord.
Locking in a deal that will decrease monthly expenses can be a
game-changer. If a property you are interested in is out of your predetermined
budget, first see if the landlord will budge on the rental price. If not, look
elsewhere. In most cases, it won’t be worth splurging and taking the risk. The
same rule applies to tenure. If you are looking for a short-term lease with
renewal options, but a building is requiring a long-term lease, it is essential
to consider how your business will be affected.
- Understand
the type of lease you are entering
There are a few different types of commercial leases. Make sure you
understand what type of property you are renting and how the payments will be
executed.
Percentage Lease:
This is the type of lease used most commonly
for retail spaces. With a percentage lease, the tenant pays the landlord a base
rent as well as a sales percentage.
Net Lease:
In a net lease, the tenant must pay the
landlord expenses incurred while renting the property, such as maintenance
expenses, in addition to their rent.
Gross Lease:
In a gross lease, all fees are included in the per
square feet price.
- Further
examine the agreement
Many people sign a lease without thoroughly reading the fine print.
Steven Taylor of Taylor Equities believes, this can be a grave mistake. Spend an ample amount of time reading through your
lease agreement. If there is anything you don’t understand, consult a real
estate professional or lawyer. Otherwise you may end up signing an agreement
that greatly favors the landlord. Often, renters don’t realize that their lease
is negotiable. Look through the agreement and discuss each clause. A lease
agreement should clarify all of the tenant’s rights and obligations.
Do your research, negotiate a deal, and always have an exit plan. The
process of renting a commercial property can feel overwhelming, but if you take
the time to consider the factors that will affect your business, you could save
yourself from a bad business deal and improve your chances of long-term
success.
