What to Consider When Renting a Commercial Space
Thinking of renting a commercial space for your small business? Before you sign the lease, here are some tips for what to consider.
So it looks like you’re ready to grow your business and take on a new commercial space. Although this is an exciting time of expansion, you might be feeling overwhelmed or unsure of how to choose the perfect space for your business. Fear not, we’ve got you covered with this 10 point checklist on what to consider when renting a commercial space.
1. Don’t Rush the Process
There is nothing worse than making a rash decision and choosing the wrong commercial space for your business because you’re feeling a time crunch. Make sure you give yourself adequate time for a smooth move by finding the perfect space and coordinating all the moving details. Typically, you should allot for 3-6 months.
2. Know Your Neighbors
Make sure before moving into a neighborhood that you’ve done your research. The best way to get the gist of your neighborhood is to drive or walk around and make observations. You can also do some digging to find out about the demographics of your potential customer base, including the income levels of your neighbors. From your observations you can deduce whether or not there will be a demand for the unique product or service you’re selling.
3. Leave Room to Sublease
A good business owner always budgets, but sometimes you still might end up biting off more than you can chew when you sign a lease. If you need extra capital, see if you would be able to sub-lease your space to another business. Conversely, consider sub-leasing from someone.
4. Stay Future-Oriented
Keep in mind that your business may grow, and know what kind of limits you will encounter if you want to expand. For instance, check if you will be allowed to build out the space by verifying whether or not zoning laws will impact your expansion plans. While for some this may not be a priority, your small café might turn into a larger restaurant down the road, so make sure your space’s limitations won’t hinder your growth!
5. Ensure if You Need to be Insured
Many landlords require you to purchase insurance, but make sure you can make do with the terms. Not only do you not want to be uninsured, but you also never want to be underinsured!
6. Prepare an Escape Plan
Be aware of the punishments of breaking your lease. This means you’ll want to review the opt-out clause. In some cases, you might not just lose your security deposit, but could even get sued for ending your lease early! After all, a lease is a form of a binding contract.
7. Consult the Professionals
Although you may not want to pay the extra costs, hiring an attorney and broker can be invaluable. You do what you do best, and leave the rest to the seasoned professionals who know the ins and outs of the commercial rental industry.
8. Check all the Clauses
Often times the fine print is where you can get into trouble. Don’t unknowingly get stuck in a property that restricts signage creativity, different contractors and service providers, or other limiting clauses. For example, watch out for a radius clause, which can hinder your growing business by restricting you from opening a second location (typically within 5 miles of your store).
9. Negotiate, Negotiate, Negotiate
Now is your time to make sure the lease terms sound manageable to you. Address points like rent increases, and the specific expenses you will take on like maintenance or other hidden fees.
10. Always Sign the Dotted Line
Never agree on a lease where the landlord is making promises by word of mouth. Unless your agreement is in writing, you cannot guarantee your landlord will fulfill their end of the deal.