How to Lease Commercial Real Estate

Posted on November 16, 2016 at 3:13 pm

commercial real estate

Leasing commercial real estate for your business is a big undertaking. Most business owners don’t take the decision lightly, yet even the most experienced business person can end up trapped in a building that costs too much, doesn’t allow room for growth, is located in a bad market, or much worse.

So, how do you find a commercial real estate property that will work for your company and negotiate a lease that will keep you protected? Let’s discuss.

Length of Lease

It is important to know that every single clause on a commercial lease is negotiable, and this includes the length of the lease. That said, most landlords will be unlikely to budge when it comes to the length of your stay. On average, you can expect to sign a 3-5 year lease on any commercial space.

For small to medium size businesses, flexibility of space is key. Will your company grow or remain the same? This should help you decide how long you want to stay. Additionally, if you could see your business staying in the space past the 5 year mark, it would be wise to ask what the percentage of rental increase would be so you know what you can expect.

Surrounding Properties

Take a look at the properties nearby. What are they paying for rent? Are you being overcharged? Is your company in direct competition with a nearby business? These are important things to consider as they may directly affect your profit margins.

“Out” Clause or Sublease Clause

In case your business faces bankruptcy, or any other serious concern, it is important to determine an ‘escape route.’ Of course, very few circumstances would leave a landlord comfortable with letting you out of your lease, but some are negotiable. At the very least, they may allow you to find a sublessee for your property instead of facing serious charges.

Hire a Commercial Real Estate Agent

There is a lot that can be negotiated when signing a lease on a commercial property, and it can be very confusing. It is important to shield yourself, and your business, by hiring an expert. Commercial real estate agents understand the market and have in-depth knowledge of these types of contracts. Working with a commercial real estate agent could be the difference between a peaceful landlord-tenant relationship, or disaster.

Are you seeking commercial real estate to lease or purchase in Birmingham, AL? LAH Commercial can guide you along the way. Contact us today.