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Published On: Thu, Jun 20th, 2019

5 Things to Consider When Leasing Your First Commerical Property

5 Things to Consider When Leasing Your First Commercial Property

Whether business owners are moving their small start-ups from their garages to commercial offices or they’re already responsible for running successful companies but they’ve never actually gone through the process of signing a commercial lease, they’ve come to the right place.  This article will offer plenty of helpful information and tips on how to get the process started. Read on to find out about 5 things to consider when leasing your first commercial property before even starting the search for the right building.

Terms of the Lease

Arguably one of the most important things to consider when leasing a commercial space for the first time is the terms of the property lease.  Most small business owners find that it makes the most sense to sign on for one to two-year terms with the option to renew.

There are a variety of reasons that most business owners are better off not signing on for longer-term leases.  For one thing, it’s impossible to say where any business will be heading even a year down the line. This makes it impractical to plan for longer lease periods.

Plan for Maintenance

Make a point of finding out what areas of building maintenance will fall under the tenant’s realm of responsibility prior to signing a lease.  Some commercial property owners take care of their own maintenance, while others hire management companies and yet more place stipulations into their leases saying that tenants are responsible for their own maintenance and repairs.  

It’s wise to pay attention to what’s in the lease, as some landlords even place stipulations as to who their tenants are allowed to hire.  One Chicago tenant was even barred from using nonunion labor for repairs that were considered the responsibility of the tenant.  The takeaway is that all tenants should make a point of carefully reviewing those areas of their leases that pertain to maintenance and repairs.

Reputation of Real Estate Broker

It may be tempting to try to avoid what seem like unnecessary hassles by renting directly from a property owner, but that’s almost always a mistake.  It just makes more sense to work with a property management firm like JGM Properties commercial real estate.  That way, both landlords and tenants will be able to ensure that all parties are on the level and their interests will be adequately represented in the transaction.

photo/ mohamed Hassan

The Clauses

There are a number of different clauses that can be placed in a lease agreement to ensure that the tenant’s best interests are being respected.  A co-tenancy clause, for example, may be beneficial for small businesses. This type of clause allows tenants to break their leases if the building’s anchor tenants wind up closing down or moving out, while exclusivity clauses ensure that no space in the building can be leased to competitors.

The Fine Print

Some business owners choose to hire real estate lawyers to read over their lease agreements, while others work with brokers.  Either way, it’s a good idea for them to familiarize themselves with real estate terminology so that they can understand the fine print.  Make a point of clarifying anything that doesn’t make sense prior to signing on the dotted line.

The Bottom Line

Leasing a commercial property for the first time can be stressful, but it can also be exciting.  Just make sure to consider the factors listed above prior to signing on the dotted line.

Author: Laura Brown

 

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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