What to Look for in a Lease
If you are considering leasing space for your business, here are some things to look for and some questions to ask before you sign that document:
- How Much Space Do You Need?
Decide on the maximum amount of space you will need for your business operation. Commercial realtors love to show you large spaces and suggest that you can "find something to do with the extra space." But unless the space can bring you additional income, it is more money you have to pay each month for space you aren't using. Stick to your limits on this one.
- How Pays for What?
Realtors and leasing companies are fond of throwing out terms like "triple net" and "gross" leases. Ask specifically what is included in the lease and what is not included. Some costs that may or may not be included in the lease are utilties, property taxes, and maintenance (snow removal, lawn mowing).
- Is There Enough Parking?
Depending on your type of business, you may have many customers coming to your business. Is there parking for employees? Is there enough parking for customers? Is there enough handicapped parking?
- What Restrictions are in the Lease?
Restrictions might include use of the space in the evening and on weekends, signage size and placement, and subletting (allowing someone to use part of your space).
- Who are the Neighbors?
Check out the other tenants in the building or strip mall to make sure none are in competition with you or would be undesirable. Ask if you can have an exclusive on your type of business, to keep competitors out.
- What Happens if You Break the Lease?
This is an important question. Find out the penalties for breaking the lease. You might want to look elsewhere if the penalties are too high.
- Can you Expand?
Ask about the possibility of expanding or of getting first rights at adjacent space as it comes available. You want to stay flexible for future possibilities.
Finally, look carefully at the lease document and take it to your attorney to be sure there are no surprises in the document.
