Leasing the perfect space for your business is an exciting milestone, but navigating lease terms can feel overwhelming. Beyond finding the right location, you’ll want to be 100 percent clear about what you’re signing up for. Wouldn’t it be wonderful if an expert could help answer questions regarding your rights as a tenant, subleasing options, termination clauses, and more? At Aim High Realty , we specialize in helping you find the best fit for your business needs. Here’s a guide on what to consider as you embark on this important step of signing a commercial lease agreement.
7 Factors to Consider Before Signing a Commercial Lease
- Choosing the right location: Ensure the location supports your business type, is convenient for your target customers, and has minimal competition. Check zoning laws and lease clauses for any activity restrictions. A knowledgeable real estate broker can help find locations aligned with your business needs, saving time and avoiding legal issues.
- Choosing the right lease type – There are three main commercial lease types:
- Gross lease – The tenant pays fixed rent while the landlord covers the property expenses. This is the simplest lease type and is generally higher than the other options. It is preferred by some tenants as it is a fixed predictable expense every month.
- Net lease – The tenant pays base rent as well as other property-related expenses like utilities, maintenance fees, and cleaning fees. The amount depends on whether it’s a single, double, or triple net lease. Net leases are preferred by tenants who seek long-term, stable locations and prefer control over operating costs.
- Percentage lease – The tenant pays a base rent as well as a percentage of their revenue, earned on the premises. This allows for keeping the rental costs low when sales are lower and increases the costs only when sales increase.
- Choosing the lease duration and renewal options suitable for your business– Lease duration typically ranges from 3 to 10 years. While a longer duration offers more stability, it might not work if you need to relocate your business due to any reasons. Shorter leases usually come with higher rent but offer more flexibility for relocation. Ask your preferred commercial real estate broker to help you choose the ideal lease duration that will work best for your business.
- Understanding the rent escalation clause – It’s important to review the rent escalation clauses to know when to expect the rent to increase, and whether it will occur as fixed increments or market adjustments.
- Who will handle the maintenance and repair responsibilities? There are two main types of maintenance and repairs – structural repairs and internal repairs. A clear understanding of the maintenance expenses that the landlord will cover and the ones you will cover will help avoid surprises down the line.
- Who will cover the tenant alterations and build-out expenses? If your business requires modifications, such as partitions, electrical work, or HVAC adjustments, determine who will cover these costs? Many landlords offer a negotiable tenant improvement allowance to help with expenses. Also, you need to understand whether your modifications comply with the building codes and zoning policies.
- What options are available to end your lease before its due date? You need to plan an exit strategy as your business circumstances may change. Some leases allow early termination options but with a penalty. Your lease may allow you to sublease to another potential tenant. Ensure that your commercial real estate broker negotiates a favorable exit strategy to enable you to prepare for the unexpected.
Work with a Trusted Real Estate Advisor
Navigating commercial leases can be complex, involving various terms, zoning laws, and required permissions to ensure smooth operations. At Aim High Realty, we know that securing the right lease goes beyond arranging finances—it’s a strategic investment in the future of your business. We provide tailored guidance to help you understand lease terms, identify the ideal location, and negotiate favorable conditions for long-term success. For expert support in your commercial lease journey, contact Aim High Realty today.
At Aim High Realty, our mission is to help you achieve your commercial real estate goals to support your business success.