There are three basic commercial lease categories – retail, office, and industrial – each with their own special circumstances. For this blog I will briefly discuss the retail lease. Retail leasing is mainly driven by location. Several key elements in establishing or growing a business include having a good business plan, proper budget, financing, lay out and space design, leasehold improvements regiments, traffic counts, parking, and proximity to other amenities. Ultimately, your decision to locate in a specific spot boils down to location and whether it can foster success.
Here are some tips to consider when investigating a location for your business:
- Look into lease rates for similar properties within the same general trading location. This data will prove very valuable in negotiating with any landlord. Ask your realtor for comparable lease rates
- Research what allowances the landlord is prepared to offer to “induce” you to sign a lease. A couple of examples of inducements would be to negotiate a rent-free period to cover some of your costs in building out (or converting) the space for your business use. In some cases landlords will offer cash inducements for leaseholds. For example, if you spent $5000 in flooring to upgrade the space, it would not be unreasonable to negotiate for a cash allowance to cover part or all of the cost
- Hire a professional to help you find a location and negotiate a lease. Look for an experienced agent who regularly practices commercial leasing. As a smart person once said, “The only thing more expensive that hiring a professional is hiring an amateur”
- Finally insist that any Offer to Lease you sign contains a condition allowing your lawyers to review the terms in the landlords lease.
These are just some tips to get the process started. Do some of your own research, hire a good lawyer, and contact a knowledgeable commercial realtor. With all the right pieces in place your life will be a lot easier and your business will have a greater chance of prospering.
Come back for more next week, if you need help or have any questions email us at firstname.lastname@example.org