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Some points for small business owners to keep in mind about commercial leases

| Mar 15, 2017 | Real Estate |

Whether you are an established small business or a fledgling operation looking to make your mark, there will invariably come a point when you need to consider commercial space. For those in the former category, this might mean relocating to a more suitable location, while for those in the latter category, it might mean setting up shop in an area favored by a target market.

Regardless of which category an entity falls under, the simple reality is that the acquisition of commercial space will more than likely involve the need to execute a lease. While this might seem like a simple enough exercise, the reality is there are many issues to be considered before signing on the dotted line.

Some of these issues relating to commercial leases include:

  • Length of the agreement: Experts indicate that the majority of small business owners should consider executing no more than a one- to two-year lease with a renewal option.
  • Maintenance/repair: Unlike residential property leases, which almost always dictate that landlords must make the necessary repairs and perform the necessary maintenance, commercial leases can go either way. As such, experts indicate small business owners must learn ahead of time which party is responsible for potentially costly maintenance/repair costs.
  • Hidden fees: Small business owners should inquire as to whether a commercial lease contains costs beyond just rent, including utilities, maintenance fees and common area maintenance (i.e., upkeep of lobbies, restrooms, parking lots, etc.).
  • Business protection: Experts indicate that small business owners must seriously consider the inclusion of certain clauses in the lease that expressly protect their best interests. For example, an exclusivity clause would guarantee that the landlord does not rent space to a competitor, while a co-tenancy clause would reserve the right to break the lease in the event the anchor tenant departs and no replacement is found.

What all of this really serves to underscore is that small business owners looking to execute a commercial lease should seriously consider meeting with a skilled legal professional who can review its terms ahead of time and handle the necessary negotiations on their behalf.