Entering into a commercial rental contract can be an exciting time for you and your business. Finding the best place to open or grow your business is one of the most important parts of being a business owner. This is where the sales happen, where you will grow, and most importantly, what people will associate your business with.
So that doesn’t sound so important, right? All joking aside, entering into a commercial tenant agreement can be overwhelming to say the least. Unlike a residential rental agreement, there are no standard forms and every lease is completely different. There are, however, certain things you can proactively do to make sure you are set up to have the best commercial tenant experience possible.
What are these five rules, you ask?
1. Have someone who knows the lingo and industry very well represent you.
The tenants have all the power when it comes to the first impression and the right company working for you will know exactly where to take you first. There will always be properties available to lease and those landlords want someone in there as soon as possible, as every day they are vacant they are losing money.
Having the right representation means they are sifting through the paperwork to make sure everything looks good in your favor and there are no hidden terms or deal breakers the landlord is trying to sneak past you. The brokerage that represents you will also make sure to help you find the best place for your business physically and financially.
2. Put Everything in Writing
Once you found the place you think you want to sign with, make sure everything that you discuss is put in writing.
Every. Single. Thing.
Gone are the days of a gentleman’s handshake over a deal. If it’s not in writing, it won’t hold up in court, and most likely won’t go in your favor. Did the landlord offer to give you an extra storage space in another hallway at no charge? Put it in the lease. This goes hand-in-hand with having good representation. These are the things they won’t miss when it comes to going through the paperwork.
Even if it seems arbitrary, it is best to put it in writing. Something as simple as bringing your dog to work, can become a legal problem if it is against the landlord’s no pet policy that you may not even know exists. Having it in writing saves you every time.
3. Choose Terms YOU are Comfortable With
It is in the best interest of every commercial property owner or management company to want the longest terms for the tenant. The longer someone is occupying their space, the longer they have a guaranteed income for that space.
However, all leases are negotiable, and it is best to not sign something you are uncomfortable with. It is much easier to sign a shorter lease and ultimately extend it than it is to sign a longer lease that you may need to try to get out of earlier. Ending a commercial lease can come with high costs and penalties.
You also want to make sure you are comfortable with the terms not only in length but in contract. Some commercial properties want you to pay part of the taxes, hold you responsible for building upkeep, and take control of any fixtures once you vacate the property regardless of the fact that you purchased them. These are all things that you want to negotiate and make sure you are comfortable with what is expected before you sign anything.
4. Know Your Rights
While the landlord often has the upper hand in the commercial industry space, the tenant still has rights prohibiting property owners of certain things. The number one right that should always be protected is the right to privacy. The business owner has a right to complete privacy and is allowed to conduct their business in the way they see fit, as long as it’s legal.
Additionally, the property owner cannot access the business any time they please. Except in a true emergency, the landlord must give notice to the business that they need in there for repairs or other building needs.
5. Do Your Homework
When you find what you consider to be the perfect place, do some homework. While the agent representing you is doing their homework, you should be hitting the pavement. Walk the building and talk to other business owners. Ask questions regarding how things are handled when there are problems. Find out how long these businesses have been there and how long they plan to stay. Happy tenants are the easiest way to gauge how the future of your business in that space will pan out.
If you follow these 5 rules, you should have no problem securing and maintaining a solid commercial tenant lease where your business can continue to grow and thrive.