Small Business Office Advice

Commercial Lease Do's and Don'ts

Leasing commercial property? We provide some helpful advice on leasing office space and discuss a few common mistakes you'll want to avoid making.

Finding the right space for your business is nerve-wracking, especially if it is your first time leasing commercial property.

Although commercial leasing appears similar to residential leasing, you can be sure that your college apartment rental didn't prepare you for what lies ahead. You need to know the do's and don't of leasing before you hit the streets in search of a new location for your business.

Commercial Leasing Do's

  • Shop Around. Right off the bat, you need to shop around for the best deal. Even in markets where commercial space is tight, you can't make an informed decision until you know what your options are. Plan on visiting several potential sites and taking as much time as you need to assess the leasing landscape.
  • Value Flexibility. Unlike residential leasing, flexibility must be the primary consideration for growing companies. Even though location will influence rental costs, a business on the move can't afford to be locked into a long-term lease agreement. If the business really takes off, you could find yourself stuck in a space that you have outgrown long ago.
  • Negotiate. Commercial space landlords are used to negotiating with tenants. In fact, many will intentionally inflate rental quotes to leave room for negotiation. So from a tenant's perspective, it's important to negotiate until you have reached an agreement everyone can live with.
  • Check References. Your landlord will inevitably check your references, but you should check your landlord's references as well. A landlord who doesn't live up to his responsibilities can become an albatross around your company's neck. Contact other tenants to verify your landlord's track record in meeting his responsibilities and living up to his promises.
  • Consult Your Attorney. Commercial leases are cumbersome legal documents containing tons of details and conditions. Unless you have a legal background, there is a good chance you will miss something important, so have your attorney review the lease before you sign on the dotted line.

Commercial Leasing Don'ts

  • Over-lease. Many first-time tenants make the mistake of leasing more space than they actually need. As a general rule, most businesses only need about 200 square feet per employee. Depending on the nature of your business, that number could increase. However, in most cases you are better off leasing less space for a shorter period of time and retaining the option of moving as your business grows.
  • Be Discouraged. Landlords tend to view first-time tenants with a certain amount of skepticism, particularly if this is the first time you have leased commercial space. From their perspective, due diligence requires them to check references, request credit reports, and inquire about your business' financial status. But don't let the process bring you down. Compliance with the process is a necessary step toward finding the perfect new space for your company.
  • Neglect Lease Details. For the duration of your lease, your activities will limited to the conditions of the lease. In your eagerness to move in and hang a shingle, don't overlook the details of the lease. If a condition could potentially restrict your activities at any point in the future, discuss it with your landlord and amend the lease to reflect your concerns.

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