Despite the fact that steering your business to success can be rather challenging, commercial real estate is nowadays working in the favor of the goals and objectives of business owners. In case you are just starting a new business or are in need of extra business space, there are ample choices with enticing market conditions that are ideal for entrepreneurs just like you.
Therefore, after you have sampled a few spaces that you perceive as ideal, there is urgent need to focus on getting a large scoop of the best possible deals. When you focus your energies on acquiring one of these spaces soonest, your property owner will hand you a commercial lease. In theory, you can negotiate the terms of the lease. Nevertheless, the process of negotiating a commercial lease to get the best deals is rather complex and difficult as well. Therefore, after you have located your perfect office space, the following tips will come in handy when negotiating a business space lease.
Who is responsible for maintenance and repair?
As opposed to residential leasing where the repair and maintenance costs rest in the hand of the property owner, commercial leasing is quite different. In certain circumstance in commercial leasing, the property owner despite being the owner of the property is not accountable for the repairs as well as maintenance of the property.
Some commercial leases stipulate that the occupants of the business space are to take up the responsibility of any repairs as well as maintenance that the property might require. Some are even more specific as to stipulate that the occupant is responsible for repairs on the facility’s systems. In gross leases, the rent includes the cost of repair and maintenance whereas in net leases, the rent does not include these expenses therefore you have to pay for them separately. Examine your lease critically to know all the repair and maintenance requirements of the lease. An attorney comes in handy to inform you of your rights and responsibilities to this effect.
The lease period
A critical factor that you cannot risk overlooking is the lease period. Ideally, you will benefit the most from short-term leases. Such leases address the need of your business in terms of dynamics as well as flexibility in the event that you want to relocate to another business location. On the other hand, a long-term clause guarantees you affordable business space over a relatively long period, hence setting in a tradeoff between the two leases.
Generally, it is advisable that small businesses negotiate one or two year leases that come with renewal options if need be. You may also be keen on negotiating rent increases such that you are not hit with unexpected rent increases that may easily interfere with your business cash flows alongside your margins. Some landowners at times offer seemingly sweet deals that may at times trap you in the future. It is best to consult a real estate agent who is well informed about the local market to avoid such problems. However, it is also vital to note that real estate agents earn commission on the overall lease of the property so you may want to seek the services of an expert real estate lawyer prior to starting to work with the real estate broker, so they can guide you in exploring the best options.
Read the lease terms
You have to read the lease terms first, after which you should consult an expert real estate attorney to evaluate the clauses as well as the fine print of the clause critically. It is in the best interest of the protection of your investment together with other long term interests of your business to negotiate possible add clauses of the lease, such as the sublease, the exclusivity clause, as well as the co-tenancy clause. For example, the sublease clause allows you to lease part of the space to another tenant until the time when you require using it.
In case you require major improvements to the property, you may need to employ your negotiation skills to the best of your abilities and have the proprietor cater for the improvements at no cost. In most cases, property owners are always willing to cater for tenants improvements for tenants with long-term leases.
Much like residential leases, property owners tag extras including upkeep for shared facilities, also known as CAM maintenance fees among other expenses. As mentioned earlier, these utilities will be your responsibility as the tenant but it is wise to know how they are measured, whether individually or are apportioned using the square meter.
With the help of a real estate broker, you will be able to bring to light such hidden fees as well as policies that are related to commercial clause during the negotiation process. You should not forget to make negotiations on the rent and rent increments. Be sure to examine different rates for comparable spaces. When the rent is seemingly too high for your ideal property, it is wise to ask for a reduction.