It’s an exciting time when a business owner decides to lease their own commercial space or expand into a bigger location. However, unlike residential leases that are usually only a year long commitment, commercial leases are typically five year commitments. A lease this long can really drain a businesses bottom line if it isn’t a well-negotiated transaction that protects both the landlord and the tenant. This is where the expertise of a commercial real estate broker is most beneficial: protecting clients from bad leases. With that in mind, here are our top three suggestions before entering a commercial real estate lease.
- As we have already hinted, using a commercial real estate broker is important. A good broker has market knowledge, so they will be able to compare lease rates, tenant improvement dollar amounts, rent abatement, and more. Without this market knowledge, a business owner may not know to negotiate for these cost-saving measures. Plus, wouldn’t it be nice to have an advocate on your side working for you while you continue to work on your business. And did we mention, our tenant representation services are free.
- Two common requests that business owners don’t ask of their landlord is first right of refusal and business exclusivity. If your business plans to expand in the future (and what business doesn’t want to grow!) wouldn’t it be nice to stay in the same location and only have to expand your business to the adjacent units? Less moving costs, same address so that your customers already know your location, and so many more benefits. When you request first right of refusal in your lease, you’ll have the ability to take any adjacent spaces before a new tenant signs a lease. The second request most overlooked by businesses is exclusivity. While some businesses may not care if a similar business moves in two suites down, other businesses can really take a financial hit with a nearby competitor. Therefore, businesses can negotiate with landlords for exclusivity in the center so they won’t be bothered with competition so close by.
- Whether you negotiate your own deal or utilize a commercial real estate broker, you should always seek the counsel of an attorney to review your lease. Furthermore, an attorney with commercial real estate experience. Unlike residential contracts/leases, commercial real estate leases are not uniform. No two look alike. An experienced commercial real estate attorney will be able to review your lease and ensure that it protects you and your business.
Leasing an office space, retail space, medical office, warehouse, or industrial space takes time, market knowledge, and commercial real estate expertise. Take advantage of a commercial real estate broker and attorney before you go to lease on your next space. O’Donnell Commercial provides tenant representation services as no cost to the tenant. Send us your requirements (location, size, building amenities, and more) and we’ll send you a FREE report of listings.