Starting or running a business involves many concerns. You need to make sure you minimize these concerns. To do this, you should first ask your future landlord about the space to be leased or the lease. This information will allow you to make intelligent choices and prevent potential problems with rental rates, insurance, car parking, subletting and other significant aspects of a tenant’s life.
1. What Does the Cost of Rent Include?
The rent cost is your primary concern, but you need more than knowing what it costs. Commercial leasing is different from residential leasing. There are various leases, and the rent amount varies within each type. The most common is the gross lease, meaning you disburse a fixed amount monthly and don’t deal with operations, repairs or taxes. A net rental involves you paying a certain amount of taxes, whereas a net-net rental applies to you also pay a certain amount of insurance. A triple net rental means the tenant pays for every repair and operation expense. This type of lease is typically used for industrial businesses. With a percentage rent, you are entitled to pay a fixed amount and a share of your business’s earnings.
2. Which Role Does Insurance Play?
As previously stated, in the case of a three-net lease, it is understood that you will pay a portion of the building’s insurance. If your lease differs from this type, find out who is accountable for these payments. Even though renters’ insurance is low, it is essential to check if you will be held responsible for it before consenting to a particular rental amount and assuming that it is everything you will be paying (in addition to utilities). This point is of great importance to you, especially if you occupy a multi-tenant building or mall space. In such a case, many owners take out insurance for common areas (washrooms, stairways, elevators, lobbies and walkways), while renters take out their coverage for renting spaces.
3. Could a Rent Increase Be Expected?
Since commercial leases are usually for several years, it can happen that the amount of your rent will increase. Several owners add clauses to their leases specifying the details, such as the date and the increased price. However, some landlords do not, so you should raise this before signing the lease. Also, they may stipulate that you are liable for any tax, insurance or utility increases that may arise over the rental period. Sometimes you can negotiate some prices and time frames for potential additions. If you have any questions, an attorney or business real estate professional can review the rental agreement before signing.
4. Is Subletting an Option?
It’s best to lease a little more space than you need, particularly when you start a new company. It gives you leeway for growth, mainly with a lease on a long-term basis. However, it is not necessarily feasible, and your business may grow faster than you had planned. In this situation, check to see if a sublease of the space is possible. Although your landlord may consent to let another tenant move in if you relocate, certain restrictions may apply to persons permitted to move in. If you rent a space in a high-end shopping mall, the owner probably won’t want a bottle store or pawn shop to move in.
5. Which Extras are Offered?
Last but not least, asking your future property owner about the amenities offered is essential to determine which extras are included in your tenancy. For instance, if security is available in the building, can you benefit from it, or are you responsible for hiring your staff? The same goes for Wi-Fi, washrooms, lounges, cafeterias, conference rooms, restrooms and other shared spaces. Check if these are forbidden for you, your employees, and your clients. Also, ask questions about parking. Can your staff and clients park wherever they want, and will they pay for it? Will there be plenty of parking for the regular clientele? It is also essential to find out about advertising and signage to know what you can and cannot display.