Opening a business can be one of the most exciting moments in your life, but it can also be a nerve-wracking experience. While you likely know the ins and outs of your business, the details of a commercial lease can be a little more daunting. Therefore, we decided to break down some important things to know about commercial leasing.
Research
Signing a commercial lease for a great price might be tempting, but it’s important to explore all your options before you sign. Different businesses have different building needs, so you need to do independent research.
1. Strip Malls
The most available and affordable commercial properties tend to be in strip malls. Shopping centers can be an excellent way for new businesses to gain extra foot traffic and visibility, but only if they’re at total capacity. Strip malls that are half vacant don’t attract as many customers as those at full capacity.
2. Zoning and Codes
Always check your city’s code and zoning laws at your local clerk’s office. The laws can be very intricate in some jurisdictions, and even seemingly normal or harmless things can go against local regulations. Some places may require the added expense of an architect to sign off on your building plans, even if it’s just a basic remodel and not a complete rebuild.
Details of Your Commercial Lease
After you’ve found the right place, you must work out the details with the owner. If possible, you should also read reviews about the landlord or property company to understand how they do business. Unlike residential leases, commercial leases can vary drastically. Here are some important clauses to examine in your contract:
1. Utilities
Most commercial property owners will require the tenant to cover all utilities. If they’re willing to cover any, it will be specified in the contract.
2. Maintenance
Interior maintenance includes things like leaky pipes, electrical breakers, and light bulbs/ ballasts. Exterior maintenance includes things like parking lot surfacing and landscaping. Typically, the tenant is responsible for all interior maintenance inside their unit unless stated otherwise. For exterior maintenance, landlords often take care of this for you.
Some leases in strip malls or properties with multiple businesses will include a Common Area Maintenance (CAM) charge. A CAM charge is when the landlord charges all tenants to maintain common areas such as the parking lot, landscaping, strip mall advertising, etc.
3. Amendments and Termination Clauses
Two significant differences between commercial leases and residential leases are the ability to negotiate and the duration. Business leases can run anywhere from one year to twenty-five years, with five to ten years being the most common. The termination clause will include information on the penalties if you decide to terminate your contract early.
When it comes to commercial rentals, anything is negotiable. As a result, it isn’t uncommon for tenants to request the landlord do things like replacing the HVAC, light fixtures, or other things that the landlord generally doesn’t cover.
Insurance
All landlords will require insurance, and it’s the most important thing you can get for your business. Not only will this protect the landlord’s investment, but it will also protect you from losing your entire business in the event of an accident, liability claim, or fire. If you’re looking for insurance to protect your business, contact Snyder Insurance and they’ll help you find a plan that’s right for you.
