Understanding Commercial Leases

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Do you fully understand the process of buying a commercial space? Even more complicated, what about the ins and outs of a commercial lease? If you have a better understanding of the process, you will be better equipped to identify certain areas of a commercial lease that may set you up for disaster later down the line.

Know the type of location you want to be in.

It’s important to research every area you are interested in. Finding out what the zoning laws are, as well as attributes of the surrounding area, like local crime rates, can help you to avoid purchasing a property in a neighborhood that might decrease your chances of running a successful business.

Determine what you will absolutely need for your space.

When looking for a space, it’s important that you ask whether or not your property can handle certain functions. Depending on your business’ needs, if you require a certain feature to run properly (like an exhaust system for a restaurant), it’s good to know if that would even be possible. If it’s not, your business could be in trouble at the onset.

Always measure the area’s square footage.

There is something referred to as a loss factor, which is the difference between the marketed area of the property versus the useable size of the space. Sometimes, this difference could be up to 50 percent less than the footage you thought you were getting. This is why it’s important to measure the property in person.

Ask to see the property’s previous utility bills.

This is information that you are entitled to, so don’t be afraid to ask for it. Utility costs vary wildly from property to property, so you should know what to budget for before signing the lease – or if you would be able to maintain these costs at all.

Demand a copy of the lease.

It’s important to, first, make sure that you are speaking directly with the landlord who you will be working with in the future. That way, you can be positive they are giving you accurate answers to the questions you are asking. Next, you want to make sure that you are reading over the entire lease before you sign anything. This is your time to check for any hidden expenses or information the landlord left out during your conversation.


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