You may assume that a commercial lease is similar to a residential lease, and in some ways it is. But commercial leases must address additional items that are not applicable to a residential property. Knowing what these items are is crucial to making good decisions for your business.
Here are four items that are specific to commercial leases that you should be aware of before you sign.
1. Lease Duration
Residential leases are typically for one year at a time, but commercial leases can very between 1 to 100 years. Choosing the duration of your lease can depend on many factors, including your business model, past success and future growth plans.
You pay base rent one year in advance; you pay monthly rent each month. Landlord and tenant must agree on one of these payment terms; the lease should also address late payments and defaults.
The lease should also specify whether the rent includes property taxes, insurance costs, utility payments and maintenance fees. If the rent does not include these costs, the lease must specify who will pay these charges.
3. Property details
Beyond the workspace, commercial property includes access to common areas, parking spaces, walkways and hallways. The lease must address the use of those spaces, as well as signage, both at the place of business and in common areas.
4. Terms of engagement and usage
The commercial lease must detail how you will use the property and articulate any restrictions such as hazardous materials, exclusivity to other businesses and other concerns.
There are many items that are specific to commercial leases that should be carefully addressed. Be sure you are comfortable with each factor before you sign.