Leasing commercial property is very different to leasing residential property, and there are many things you must consider when signing up your business to a commercial space lease.
The first thing you must do is research, otherwise you could be very stuck in a situation you can’t get out of for many years, forcing your business into the red quicker than you can imagine. Here are some of the things you must consider before signing a lease on a commercial property.
Will You Be Paying Appropriate Rent?
Know a bit about the space you are renting. Does your rent cover common areas like restrooms, hallways, elevators, stairs, and so on. How is the space measured by the landlord? Does it include thickness of walls or just floor space? When paying by the square metre, you need to understand completely what you are getting.
Set Out Cost Strictures From The Beginning
Before you begin the lease, it pays to negotiate for a cap on the percentage increase with the landlord to avoid uncontrollable costs further into the lease. Often, lease agreements incorporate a use clause to specify the activity you as a tenant can engage in on the property.
Who Is Responsible For What?
Make sure the lease specifies who will pay for repairs when needed, and make sure that includes air conditioning and heating. The agreement should spell out who is responsible for repairs on equipment within the building, as well as the building itself. This should include fit out costs, and anything else to do with your premises.
Set A Timeframe
Landlords prefer long leases; however, you can negotiate a short-term lease, especially if your business is new. Although the rent may be higher with a shorter term lease, it will mean you have less risk in the long-run. If the property isn’t as great as you thought it was, it can be a good way to find something better.
Are You Allowed To Make Changes To The Property?
Your lease should include any details on what you can and cannot do during your lease when it comes to making physical changes to the property. Painting, adding internal offices and other similar changes should be outlined before the lease begins.
Remember The Little Things
Make sure the lease is very clear on things like where you can and cannot put signage for your business. If the signage is too restricted, you take the chance of not being visible enough from the street. You need to agree with the landlord who is responsible for things like water, electricity, taxes, insurance, and rates. It also pays to find out whether you can sub-let part of the property.
Know Your Rights
Does your lease have a Right of Assignment section? A right of assignment clause allows you to transfer the lease of your property if you need to sell the business. Does it include an option to renew or expand on the space you are renting? If you need to vacate the property early, are there penalties?
Have Quality Financial Advice
A quality financial adviser will help you to understand your tax liabilities and the deductibility of rent.