Do You Need a Broker or Realtor?
If you are unfamiliar with the area, or you have little experience with leasing space, you may want to find a commercial Realtor (not a residential Realtor) to help you find space and negotiate your lease. If you have found space in a new building that you think will suit your needs, you may not need a Realtor.
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 just more money that you must pay every month. Stick to your limits on this one.
Determine What the Lease Includes
Realtors and leasing companies are fond of throwing out terms like "triple net" and "gross" leases. Instead of trying to figure out what they are talking about, ask what is included in the lease and what is not included. Some costs that may or may not be included in the lease are:
- Utilities
- Property Taxes
- Property Maintenance (snow removal, lawn mowing, etc.
Some landlords will not let you choose to pay for some costs yourself, while others may be willing to negotiate. Which is better for you?
What About Parking?
If customers will be visiting your location, be sure you have enough parking space for them, and for your employees. Ask about handicapped parking too.
Are There Restrictions on Use of the Building?
Ask what restrictions the lease imposes on you. For example:
- Can you use the space any time of day?
- What size signs may you put up and where can they be placed?
- Are you allowed to sublet your space, either while you are using the space or if you leave the space?
If you are in a retail location, sign restrictions may prevent your customers from finding y ou, so pay particular attention to this restriction.
Who are the Neighbors?
Check out the other tenants in the building or strip mall to be sure no other current tenants are in competition with you or would be undesirable to your customers. 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, because you never know when you might need to leave the space, for a variety of reasons. Find out the penalties for breaking the lease. Even if this is a great place, you might need to look elsewhere if the penalties are too high.
Can You Expand?
Ask about the possibility of expanding or of getting first rights to adjacent space that becomes available during the term of your lease. If the owner says that expansion is possible, try to negotiate some language into the lease.
