Obtaining a commercial lease is a crucial part of your business that you don’t want to mess up. Negotiating a favorable lease may not be the easiest but there are certain strategies that you can implement to find one.
How Long is the Lease?
Once you’ve found a site for your business, you’ll need to complete your commercial rental application and apply for a real estate lease. One of the first issues you may encounter is determining the length of the lease. For example, if you are a steel fabrication expert and want to open up a consultation clinic, be realistic on how long you’ll be staying at that location. A term of one to two years is ideal for most small businesses, with an option to renew included within the contract. This doesn’t commit you for too long but gives you the option to stay if you’re finding success with your business.
If you feel that another location is more ideal, a shorter lease may be better for you in case the rent rises or goes down. However, if your business relies on location, like a restaurant for example, you will want to guarantee security.
Shop Around for Comparable Rents
The amount that you’re going to end up paying throughout the lease should always be considered first. Do your homework and research the going rates around the area so you can negotiate a fair price. Part of the negotiation process includes specifying rent increases so you won’t end up looking at a bill that’s way more than what you financially planned for. Try to work out a cap on these increases so it stays affordable for you to stay in your location. Moreover, you can also negotiate the amount of your security deposit and the return conditions.
Avoid Hidden Costs and Fees
Many commercial leases hold the tenant responsible for certain costs such as maintenance. Lyle Charles Consulting, a construction mediation firm, suggests that you get the details on these costs upfront and negotiate it to be as fair as possible. Be sure to find out if your business will be responsible for certain maintenance tasks and learn about the conditions of the building so you can estimate roughly how much you’ll be paying. Negotiation can also play a big role on whether the landlord will take on any unnecessary costs that you will be coming out of your pocket.