Leasing can be a complicated process, and it can be easy for an inexperienced lessee to find themselves in a bad lease because they were not aware of the mistakes they were making. Here are five mistakes to be wary of as you navigate the commercial leasing process, as suggested in the article “The Eight Mistakes Tenants Make When Leasing Office Space”:
- Weak Negotiations. Sometimes tenants think that what the landlords puts in a lease is immutable, but this is not necessarily true. The landlord’s priority is to fill spaces in the building, which means that he or she will negotiate and concede to tenants if they have to. Even small businesses looking to only rent a tiny piece of the building have power in a real estate market in which a lot of commercial rental buildings are comprised of many small tenants. So be aware that you have more leverage than you think and be tough in your negotiations.
- Not Reviewing the Lease. This seems like a basic step, but many tenants either do not read the lease carefully or do not fully understand everything that is in the lease. Be aware of things like notice periods and sublet and assignment provisions. Make sure these parts of the lease are fair to your business.
- Not Using Representation. Using a broker to represent the interests of your business can be hugely beneficial to you in the long run, despite the short term cost. Brokers understand the market and how to negotiate for a space. They can help you find a building that best fits your business and help you negotiate a lease that will be good for your business. Sometimes trying to go without this expertise can put your business in a position where you need to end a lease early—which is not a good thing. Consider hiring someone who truly understands the complicated world of commercial real estate.
- Hiring a Broker Loyal to the Landlord. Be wary of using a broker that represents both tenant and landlord, which is how brokers at big real estate companies often work. The appeal of these brokers is that they understand the leasing process from both sides, but they often tend to side with the landlord over the small tenant, so choose carefully when you are looking for someone to fight for your business’s best interests.
- Not Leaving Enough Moving Time. If your business has never moved before, you might have no idea how long it will take to pack up and relocate to a new space. Often tenants underestimate how much work this process is, and they do not leave themselves enough time to either find a new space or renew their current lease. It could take up to a year to work through the leasing process, or even more than that if you are a big company. Start the process well in advance so that you have plenty of time to find a good deal and move if you need to.
Educate yourself on the leasing process to avoid these mistakes!