5 Things You Need to Know Before Signing a Commercial Real Estate Lease

A commercial real estate lease involves an agreement that enables businesses to rent commercial property from a landlord. Commercial leases can be full-term, net, and modified gross leases. Its identification, negotiation, and signing process is long, which is why you should know the steps involved so you can make informed decisions.

A commercial real estate lease is legally binding. This is why you should understand the lease contract as it defines your rights and responsibilities and those of the landlord. Below are things you need to know before signing a commercial real estate lease.

1. Research the area

When looking for a commercial property, researching the area will help you understand the prospective clientele. This is because location is everything for a business to thrive. Bearing in mind that once you sign the lease it becomes legally binding, and it may take at least two or more years before the lease term ends, ensure that the potential location is ideal for your business.

Consider seeking professional help for the ideal business location from industry experts like Jeff Tabor Group. They can also advise you on the benefits, differences, and value of different buildings within your preferred location, helping you make an informed decision.

2. Know the zoning laws

Zoning laws direct the development of real estate and may affect the operation of a business. Depending on your kind of business, research the municipality laws to ensure that you can run within that locality without facing any legal problems. Ensuring that your lease agreement aligns with standard zoning laws of the area will allow your business to operate without interference from local authorities.

3. What do you know about the landlord and the building owner?

At times, the landlord may not be the building owner. Before signing the lease agreement, ensure that you know who the landlord and the building owner are, their financial capacity and if they make good on their payments. This will help you protect your business should anything go wrong. For example, if a landlord doesn’t make payments to the building owner’s account, you may end up being evicted even if you made your payments on time. Conduct thorough research to ascertain that you’re signing the right deal for your business.

4. Find out about the nuisance laws

Once your business opens its doors, you want it to run without limitations. Before signing a lease, familiarize yourself with nuisance laws and check any smell, noise, and equipment clauses and negotiate where necessary. Look out for any environmental regulations governing the building you intend to lease to ensure they aren’t against your business.

5. Don’t forget the lease statutes

When reviewing your lease document, pay attention to the rent structure to determine your monthly payments, by what your rent will increase and after how long, so you can look at your budget and decide whether you’ll stay. Don’t forget about the lease term. Consider how a short- or long-term lease will affect your business. Find out about expenses like property taxes, insurance, maintenance, utilities, repairs, modifications, security, and more.

Endnote

Commercial real estate leasing can be tricky, especially when you lack the proper knowledge. Consider the above tips and advice from industry experts before signing a lease agreement.