Whether you are starting a brand new business or the small business you've been running out of your home has now grown enough to lease office space, signing your first commercial lease is exciting. Soon you will have your very own storefront or office and be able to set it up exactly how you want it. Before you sign on the dotted line, however, here are a few practical things to keep in mind:
Determine Exactly What You Are Getting
Commercial leases can be much more complex than residential leases so it's important to read the fine print and have an accurate idea of what you get in exchange for your rent. You need to know the following:
Exact square footage and location of your commercial space
Whether you and your customers have access to building amenities, including elevators, restrooms, and parking spaces
Whether your rent includes utilities and property management or you have to pay these expenses (prorated to the size of your space) separately. If the latter, ask to see recent bills to get a solid idea of how much you will pay each month in addition to rent. You may want to find a lease on the lower end of your rent budget if these expenses aren't included, while on the other hand slightly pricier rent may be worthwhile if it includes all utilities and building management fees.
Avoid Getting Locked in Long-term
Commercial leases tend to be longer than residential leases, but it's important to avoid signing an overly long-term lease when this is your first time renting commercial space. If your business grows to the point where you need a larger space two years from now, you don't want to be locked into a five year lease. You may be able to negotiate this aspect of your commercial lease by offering extra deposit money or adding a clause to the lease about giving a specific amount of notice before vacating.
Make Sure Rent Increases are in Writing
It's just a part of life that your landlord will raise your rent to keep up with rising costs in your city, but you need to know exactly how this will be handled and it must be in writing. In some cases, your landlord will include a chart that shows the dollar amount your rent will increase by each year of the lease. A more common approach is to list the percentage it will increase by. Be conservative when estimating how much your business will grow and how much you will be able to afford a year or two from now.
By following these tips, you will get the commercial lease that best benefits your business while protecting yourself financially.