How to Lease Commercial Real Estate and What You Need to Know

Commercial Real EstateLeasing commercial real estate is not as simple as renting out residential plots. This is a relatively closed in market with the relevant information made available mostly through an experienced broker. So, the first thing you need to think about when leasing commercial real estate is getting yourself a good broker. To get in sync with the market and understand the nuances of commercial real estate leasing such as zoning restrictions, you need the guidance of a reputed broker. Besides, it is the landlord who pays broker commission, not you. So, you really have nothing to lose and everything to gain by hiring a broker.

Here’s what you need to understand before you hire a commercial real estate broker.

– The broker commission is gleaned from a share from the lease, which basically means that they are driven to offer you the most high end (read expensive) space on lease.

– They have nothing to gain and maybe something to lose by pointing out things in your lease that could pose a risk for you.

– The thumb rule is the less expensive the lease, the less interested a broker will be to spend time with you and get you what you want.

This is basically why you will also need the services of a real estate attorney who will provide you with the assistance in going through the lease agreement and point out stuff that you need to negotiate with the landowner to keep your best interests intact.

The First Draft:

leasingAs a rule, the first draft of the commercial real estate handed over to you by the landlord’s attorney will be completely advantageous to the landlord. Nobody signs on the first draft. There is always a second draft that you need to skewer up with your attorney. Every landlord hopes that you sign on the first draft, but they will actually be surprised if you do. There is no such thing as a standard lease document. You need to go over it a couple of times and finally create a document in which the clauses are all lined up in a way that is agreeable to both you and the landlord.

Generally, you will be required to sign a personal guarantee when you rent out commercial property. This puts you in personal responsibility for the rent in the unfortunate scenario where the business fails to deliver.

Commercial property is quoted on a monthly or yearly basis based on square foot price. What you need to keep in perspective is that the space that you will actually be using for your office will be different from the space you will be charged for.

Various Kinds of Lease Agreements:

There are different types of lease terms and conditions which are applicable depending on your requirements and what works for you best. You have the percentage lease, the net lease, and the gross lease. The best option when it comes to the length of a lease is to settle for a short term agreement that gives you plenty of space to renew the agreement when the term is up. Long term leases are always more beneficial to the landlord. Most landlords will work in the agreement the clause to raise the rent annually based on the consumer price index. This needs to be understood thoroughly before you enter into an agreement.

Maintenance Issues:

There are always costs to bear for maintenance and repairs on the property. Make sure you are on the same page with the land owner with regards to what expenses need to be borne by you and make sure the lease agreement states these clearly to avoid confusion later on.

You can look up http://www.retailsolutionsadvisors.com for more assistance on leasing commercial space.

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Liam Ross
Liam Ross is a business consultant with a focus on information technology and digital advertising. He been a successful writer online for many years having contributed to Business.com, Huffington Post and Yahoo News. He is currently working on a book about the rise of social media and how it has altered our buying habits.