What Frequently Asked Questions (FAQ) Should You Know Before Leasing Commercial Real Estate

You should always hire an experienced tenant representative who can answer/assist with the following FAQs:

❓What are the key factors to consider before signing a commercial lease?

- Lease Term: Understand the length of the lease and whether it aligns with your business goals.

- Rent and Increases: Clarify the rent amount, any escalations over time, and how they’re calculated.

- Space Requirements: Ensure the space meets your current and future business needs.

- Location: Evaluate the location’s accessibility, visibility, and proximity to customers, suppliers, and employees.

- Lease Clauses: Review clauses related to maintenance, repairs, alterations, and subleasing to understand your responsibilities and rights.

⁉️What are common negotiation points in a commercial lease agreement?

- Rent Negotiation: Seek competitive rates & negotiate for rent abatement.

- Rent Escalation: Always seek the lowest annual increase possible.

- Lease Commencement: Always try to push a commencement date out until all of your tenant improvements are complete and you’re ready to fully occupy the space.

- Tenant Improvements: Negotiate for landlord-funded improvements or a large landlord contribution to construction costs needed to customize the space to your needs.

- Lease Term and Renewal Options: Negotiate for favorable lease length terms & renewal options to provide flexibility for your business.

- Operating Expenses: Clarify which operating expenses you’re responsible for & negotiate caps or exclusions to limit your financial exposure.

- Assignment and Subletting: Negotiate for flexibility to assign or sublease the space if your business needs change.

❓What are the important clauses to pay attention to in a commercial lease document?

- Maintenance and Repairs: Understand your responsibilities and liabilities for maintaining & repairing the premises.

- Default and Remedies: Clarify the conditions under which the lease can be terminated and the remedies available to both parties.

- Insurance Requirements: Review insurance obligations, including liability coverage and any required policies.

- Indemnification: Understand the extent to which you’re responsible for liabilities arising from the use of the premises.

- Termination and Exit: Pay attention to lease termination clauses, early termination options, and any associated penalties or obligations.

If you’re unclear on whether or not a space is right for you, or you’re just starting the process of finding a home for your business, we’re here to help.