Commercial Leasing Mistakes You Won't Make Twice
When it comes to leasing a commercial property, it's important to avoid making mistakes that could end up costing you time and money. Here are some common commercial leasing mistakes to avoid.
Not Knowing What You’re Responsible For
In an NNN or triple net lease, as a commercial tenant, you'll typically be responsible for paying additional expenses — property taxes, insurance, and CAM (common area maintenance fees) — on top of your base rent. You may also be responsible for non-structural repairs or maintenance needed on the property, so it's important to understand these costs and budget accordingly.
Not Understanding Renewals
If you want, or don’t want, to renew your lease at the end of the term, it's important to understand the notice periods required by your landlord. Neglecting to give proper notice could result in you losing the option to renew and having to find a new location for your business, or unintentionally being obligated into a new lease term with your current landlord.
Not Being Mindful of Responsibility at the End of the Lease
At the end of your lease, you'll need to return the property to the landlord in the same condition it was in when you moved in (minus normal wear and tear). If you fail to do any of the necessary work, such as removing furniture, fixtures and equipment, or repainting walls to their original color, you could lose all or some of your security deposit.
Not Taking Care of Space During the Lease and Losing Your Deposit
Along the same lines, it's important to take good care of the property during your lease. This means keeping the space clean and well-maintained and promptly addressing any repairs that are needed. Neglecting to do so could result in losing your security deposit at the end of the lease. You could even be held responsible for additional damages.
Unknown Acts of Default
Make sure you understand what constitutes a default under your lease agreement. This could include failing to pay rent on time, causing damage to the property, not maintaining proper insurance, or violating any other terms of the agreement. Understanding what could trigger a default will help you avoid inadvertently breaching your lease.
Not Knowing What You Are Owed in Delivery Conditions and Landlord Responsibility
When you move into a leased property, you'll want to make sure you understand your tenant rights and what you can expect in terms of delivery conditions. This could include things like the condition of the space, any fixtures or equipment that are included, and any repairs or upgrades that the commercial landlord is responsible for making.
Not Making Sure You Have the Correct Parking Allotment
If you operate a business that requires a lot of customer or employee parking, it's important to make sure you have enough parking spaces allotted for your needs. Neglecting to do so could lead to frustrated customers or employees. In an office lease, not having enough parking for your employees could cause problems in the future.
Underestimating Business Growth Within Your Lease Term
When you're signing a lease, it's important to consider your business's potential for growth over the term of the lease. If you underestimate your needs and end up outgrowing the space, you'll have to either pay for additional space or find a new location, which can be a costly and time-consuming process.
Not Getting Expert Help
Navigating a commercial lease can be difficult, and mistakes can be expensive. At Pillar Real Estate Advisors, we specialize in helping facilitate commercial leases and guiding tenants and landlords through the lease process. If you’re looking for an expert team to help you with your lease, contact us today.