Negotiating and signing a commercial lease can be an exciting, overwhelming experience. With so much of your company’s future tied up in the lease agreement, it is wise to slow down the process and ensure you follow certain tips to avoid costly errors.
While every lease agreement is unique, it is wise to remember several tips that could directly impact your bottom line going forward, including:
- Commit to thorough research: While getting comps from a realtor or exploring the neighborhood are good starting points, individuals should take the time to fully investigate the transaction. Individuals can research the landlord, building owner, history of the property and close-range competition. Are there nearby construction projects looming on the horizon? What do other tenants think about the landlord? Committing to thorough research could potentially highlight issues to address during the due diligence phase.
- Remember that everything is negotiable: From the price itself to the monthly payment due dates, it is wise to consider all your options when agreeing to a lease. If there are factors that could better benefit your organization, it is important to bring them up so they can be negotiated.
- Identify necessary upgrades: When comparing the property to the needs of the business, it is wise to highlight any necessary upgrades. From wiring and plumbing upgrades to potential code violations, it is crucial to get these revisions included in the contract.
- Be aware of a pre-existing condition clause: Many landlords will include a provision that the tenant agrees to return the property to its pre-existing condition when the lease is up. Based on any changes the tenant makes, this could mean reverting to the original flooring, removing walls and changing fixtures. This could prove to be a costly provision due to evolving business plans.
Whether expanding an existing business or starting a new enterprise, signing a commercial lease agreement is an exciting experience. It is wise, however, to take steps to fully research the contract, owner and terms of the agreement before signing.