When entering into a commercial lease agreement, it is important to thoroughly examine the terms to protect your business interests.
You want to ensure your lease covers key elements before finalizing the agreement.
1. Lease duration
Understanding the lease duration is a must. Review the agreement for the exact start and end dates. Be aware of any renewal options and their associated terms. Knowing the length of your commitment is essential for effective business planning.
2. Rent structure
Examine the rent structure closely. Find out the amount of rent, how it increases over time and the frequency of payment. Uncover any additional costs, such as maintenance fees or property taxes, to avoid unexpected financial burdens.
3. Use restrictions
Be aware of any restrictions on the use of the leased space. Ensure that your intended business activities align with the terms outlined in the agreement. Any breach of use restrictions could have consequences, so clarity is key.
4. Maintenance responsibilities
Understanding maintenance responsibilities is important. Determine which party is responsible for maintenance and repairs. This includes both routine upkeep and unexpected repairs. Knowing these obligations helps avoid disputes and ensures a well-maintained space.
5. Insurance requirements
Evaluate the insurance requirements outlined in the agreement. Ensure compliance with any mandatory insurance policies. Adequate insurance coverage protects both parties in the event of unforeseen incidents.
6. Subleasing options
Consider the subleasing options available to you. Understanding the terms and conditions for subleasing provides flexibility in case your business needs change.
Leasing commercial property is a big step for a business. While office vacancy rates were high at 19.2% in 2023, retail and industrial continue to have a more competitive market. Regardless of the type, ensure the lease aligns with your present and future needs and goals.