It can be tough to start and grow a business, but one thing that is currently in your favor as a business owner is the excess of commercial real estate available on the market. But even in this buyer’s market, negotiating a commercial lease can be a complex and intimidating process that requires careful research and preparation. If you have already found your perfect space, here are some tips for crafting a lease that suites your business:
#1 Understanding Expenses
Just like in a residential lease, landlords for commercial real estate will try to add extra costs such as maintenance fees, Common Area Maintenance costs, and more. Be sure to discuss utilities—these are typically your responsibility as a tenant, but be aware of how they are measured, either assigned by square footage or individually metered. Seek out any other hidden fees, and inquire as to how much tenants typically pay annually for these various expenses. Know what costs you will be incurring besides rent so that you do not find yourself surprised by anything once you are already locked into the lease.
#2 Setting Your Lease Term
The duration of your lease and the amount of rent you will pay is the first negotiation point. The key is to give yourself some long-term flexibility but not over-commit. It is better for smaller businesses to stick to one or two year leases with the option to renew. You need to also discuss rent increases over your term and what your renewal options look like so you do not find yourself dealing with any unexpected increases that could hurt your cash flow and margins.
Be prepared for some pushback from the landlord; they are typically more in favor of long term leases and will try to get you to agree to a longer term. Getting a broker involved who is familiar with the market can help you avoid any tricks and pitfalls. Remember though that the broker is getting paid commission by the landlord, so it might be worth talking to a real estate lawyer before finding a broker. They might be able to recommend a good broker and act as a consultant throughout the negotiation process.
Being aware of these and other negotiation points can help facilitate smoother negotiations. Be on the lookout for ways that you can get a better deal for your business—or lease clauses that could hurt your business. A well negotiated lease can facilitate a successful and productive tenancy!
If you are considering leasing an office rental space in Overland Park, give a commercial real estate broker in Overland Park a call at 913-685-4100! All of our spaces are located in the heart of Johnson County, which puts your business close to all of the amenities and services the Overland Park area has to offer, including hotels, health clubs, restaurants, banks, and more! Give us a call today to set up a tour of one of our available affordable spaces!