Are you just now starting a business and need a location? Or maybe you want to relocate your business to a new premise? Whatever your reasons, it isn’t just the location which matters – you’ve got to make sure that the business lease meets your needs. Here is what you should look for in a commercial business lease before you sign the dotted line.
Business leases will usually specify what the premises can be used for. Just because your business type if permitted now, it doesn’t mean that it will be permitted later if you expand or move in another direction. Think about how your business could grow and whether the permitted uses still apply.
Square footage: Usable vs. Rent-able
Commercial leases are confusing in that they often charge by usable square footage or rent able square footage. Usable square feet is the amount of space that your business actually occupies. However, many commercial rentals often include common spaces which all tenants may use (such as elevators, stairs, hallways, entrance ways, etc.). These may be added to the usable square feet. The new total with these areas included is the rent able square feet.
Let’s say that you want to rent an office which is 500 square feet, but there is another 100 feet of common space in the building.The landlord may charge you $1.50 per square foot. But, instead of charging you $1.50 for 500 feet, you may be charged the $1.50 for 600 feet. Make sure to ask the landlord how much usable square feet are in the space, and how you are charged for the total rent able square feet.
Commercial leases are very different than residential leases. You may be required to pay for a lot of the maintenance costs which a residential landlord would normally have to cover.
Landlords often will make commercial tenants pay for property taxes, insurance, common area charges, maintenance costs, and other hidden fees.
Charges for common areas
You’d be surprised how much landlords can bill you for upkeep of common areas like hallways and elevators. See what the lease stipulates about these costs and insist on a cap in the costs so you don’t get laden with high fees.
After a year in the new location, your business is thriving. So what would you do if your landlord asks for double the price for you to stay there? Hire a professional to look over your commercial lease before you sign it so you know what rent increases your landlord could ask for.
Commencement and termination of lease
If you are ready to move now but the landlord hasn’t finished repairs yet, what guarantees do you have? What about if you want to get out of your lease early – how much will this cost you? What if your landlord wants to cancel the lease – under what conditions could this happen? Again, it is really worth it to hire a professional to look over the lease so no small print is missed.