Renting commercial space is a big responsibility—the success or failure of your business could ride on certain terms of the lease. Before you approach a landlord, you should understand how commercial leases differ from the more common residential variety. Before you sign anything, make sure you understand and agree with the basic terms of the lease, such as the amount of rent, the length of the lease, and the configuration of the physical space.
It's crucial to understand from the get-go that, practically and legally speaking, commercial leases and residential leases are quite different. Here are the main distinctions between them:
Before you sign a lease agreement, you should carefully investigate its terms to make sure the lease meets your business's needs.
First, consider the amount of rent—make sure you can afford it—and the length of the lease. You probably don't want to tie yourself to a five- or ten-year lease if you can help it; your business could grow faster than you expect or the location might not work out for you. A short-term lease with renewal options is usually safer.
Also, think about the physical space. If your business requires modifications to the existing space—for example, adding cubicles, raising a loading dock, or rewiring for better communications—make sure that you (or the landlord) will be able to make the necessary changes.
Other, less conspicuous items spelled out in the lease might be just as crucial to your business's success. For instance, if you expect your camera repair business to depend largely on walk-in customers, be sure that your lease gives you the right to put up a sign that's visible from the street. Or, if you're counting on being the only sandwich shop inside a new commercial complex, make sure your lease prevents the landlord from leasing space to a competitor.
Typically, you'll be working with a lease form that's been written by the landlord or the landlord's lawyer—and you can bet that neither one of them will be looking out for your best legal or business interests. In order to level the playing field, you need to learn a bit about the terms of a business lease, so that the landlord's proposed lease is just the starting point from which you'll negotiate changes.
The following list includes many items that are often addressed in commercial leases. Pay attention to terms regarding:
The Americans with Disabilities Act (ADA) requires all businesses that are open to the public or that employ more than 15 people to have premises that are accessible to disabled people. Make sure that you and your landlord are in agreement about who'll pay for any needed modifications, such as adding a ramp or widening doorways to accommodate wheelchairs.
Commercial leases can quickly become complicated and you might have various considerations when looking for and negotiating the perfect spot for your business. If you need help specifying certain conditions for your business or defining legal terms, consider talking to a contracts attorney with experience negotiating commercial leases. They'll know which terms and conditions to fight for, and they can clearly explain your responsibilities under the lease.