When starting your business, and also during the years, the lease will be one of the biggest expenses. You would be surprised to know that most of the prospective entrepreneurs do not really do a stellar job here. First thing in negotiating a commercial lease is the simplest one. Read it. Sounds simple, right? But in the process of opening a business, it is understandable that you have many things on your mind. You might just want to “get it over with” and focus on something else. And that is the critical mistake.
What you want is a lease that is favorable for you, not the landlord! You see, the majority of leases just get signed on the spot. No checking performed. What you should know is that leases are almost always open to some sort of negotiation. Another trap you can fall in is to rent out on a month-by-month basis. While looking quite attractive, it is a potential death trap. You can be evicted with little notice. What happens with all the things you have improved? All the money that you’ve spent on the place? All gone in a matter of days. You want to protect yourself, you want to fight for lease terms. You want to protect your business. In order to do so, I have prepared some steps you can follow, which will help you in negotiating a commercial lease.
Negotiating a Commercial Lease – 12 Easy Tips
What do you actually need? Check what space you currently need and also what you might be needing in the future. Cross-reference that with your budget. Also, note what location would you prefer for the business. Maybe you are unsure of the company’s direction? Take a shorter lease, two years is plenty enough time to see. The price that you pay is more bucks per square foot but you get an exit route. You want to minimize risk.
Get a commercial lawyer. No, really, get one. Do not try to mix business with friendship or family ties. Get someone who knows exactly what he is doing. You see, leases by their nature are complex animals. Lawyers without specialization are prone to missing a few odds and ends. And this will cost you, in the long run. So, always get a commercial lawyer. If you are to take anything from this article, take this. With the commercial lawyer, you will always want to settle for the best commercial movers NJ.
You need to carefully examine every incidental you might be asked to pay. You want to make sure that your budget will fit all of the costs of the lease. What you also want to set right from the get-go, are any increases to either incidentals or rent. Will there be some and how much? That is what you want to know. If you dislike the terms of the lease, ask for them to be changed. Many leases start off unreasonable. They are expecting you to bargain. So, by not doing so, you are paying an outrageous amount. Do not do that.
Like mentioned before, leases are quite complex. You should familiarize yourself with various types of leases. Gross rent lease is your average “I pay for everything lease”. You pay for incidentals, rent, repairs, etc. Basically, whatever happens, in there, it’s on you. There is also a modified gross lease, which makes both parties share incidental costs, as agreed upon signing.Net lease, on the other hand, you pay only for two things. Base rent and any item from the following list: Utilities, property taxes or insurance. All other expenses are covered by your landlord. The double net lease makes you pay for both insurance and property taxes, as well as the base rent.
A triple net lease has you paying for almost everything. Maintenance costs, taxes, insurance, utilities and operating costs. What you need to be aware of is that these standards might be changed by your landlord. It is not that uncommon that a lease will add additional expenses, above its regular costs. You should be checking for the terms, always. Lastly, there is a percentage rent lease, where apart from the rent you must pay a percent of your gross sales. It needs to go over an agreed minimum, of course. If you are setting your business in a mall, for example, you will most likely encounter this type of lease.
Also, make sure to do some investigation on what is the going rate for leases in the area. Talk to some realtors, get an actual estimate of what the usual rate should be. This kind of information is critical in negotiating a commercial lease. Also, investigate whether your movers have storage facilities NJ. You might need them during your relocation.
Do a lot of research on the property you are considering a lease for. Are there businesses that will compete with you? Check out the traffic in and around the property. Check for potential issues that might arise in that location. Lastly, see if the landlord is an upstanding citizen. All of this can help you either to avoid a bad lease or to lower the asking price.
Ask about inducements. You have nothing to lose but go into negotiations as if you are expecting them. Share the costs of renovation perhaps? A couple of months rent-free? If you do not ask, you shall not receive. There are numerous ways to rent your apartment in New Jersey the right way.
Check how can the lease be terminated. You do not want to be evicted without notice just because it is in the lease terms. Also check how can you break the lease, if the things are not going according to plan.
Ask for a clause that states that the landlord can not rent out to a direct competitor to you, or that it needs to get your consent.
Make yourself acquainted with the terms of renewal. You need to understand all of those and to tailor them to your specific needs.
Hold up on signing. There is almost always room for some negotiation. And that would conclude our tips on negotiating a commercial lease. I hope you are now armed with more information and are ready to get the best lease possible!