A commercial lease is a critical agreement for your business.
If you think you’ve found the perfect location for your business, your first instinct may be to sign on the dotted line.
But, before you rush into it, consider these six factors to make sure you’re setting your business up for success.
1. Take time and do your homework
If you’re rushed you won’t be able to properly assess the marketplace to ensure that the needs of your business are met when you’re signing a deal. Talk to different landlords, ask lots of questions, inquire about different incentives, and try to get a feel for the process of negotiating a lease.
2. Your commercial lease is not like a house rental
Before negotiating a lease, take time to understand what costs – above the basic lease costs – the landlord will charge you over the year.
And, know what actions the lessor can legally take under certain situations, such as the late payment of rent, because you won’t be afforded the same legal protections offered to personal dwelling tenants.
3. Put your pride aside and negotiate
Doing anything less than negotiating will likely mean that you pay more, or that critical clauses to protect your best interests are left out of the lease agreement. No matter how emotionally tied to the space you may be, if you aren’t ready to walk away from the table you won’t be able to negotiate the best deal for your business.
4. Get expert feedback on your commercial lease
An expert should be able to help you include clauses that will benefit your business, tell you what to ask for during negotiations, and protect you from signing a lease agreement that could cost you money and problems in the long run.
5. Understand rental rates and space
Square footage rental rates won’t likely reflect the true price of leasing, and rates are not always as they appear. Some may be artificially high with several free months of rent offered to drive down the actual price paid over the duration of the lease. Others may increase at set times and in set increments over the duration of the lease.
It may be better to start with a smaller space, then inquire about a larger space, as the landlord may offer incentives to entice you to take the bigger space.
6. Put it in writing
No matter what promises are made, if all verbal agreements and promises are not included in the body of the lease, they will likely be excluded by a clause in the lease that says something like: “this is the entire agreement.”
This is an excerpt from the free, downloadable resource “Ten Things You Must Know Before You Sign a Business Lease,” originally contributed by Julie King and updated by Women’s Enterprise Centre. For additional tips, please see the full resource >>