Lease Commercial Space: Tips and Tricks on Getting a Good Deal

If you're reading this, chances are you're thinking about leasing a commercial space. Maybe you're a new business owner, expanding your current business, or just looking for a change of scenery. Whatever the reason, a commercial lease can be a big investment, and you want to make sure you're getting the best deal possible.

That's where we come in! This complete guide will give you some tips and tricks for getting a good deal on a commercial lease. We'll cover everything from determining your needs and budget to negotiating lease terms and working with a broker. We'll also touch on the importance of researching the commercial real estate market and looking for hidden costs that can add up over time.

Whether you're a seasoned entrepreneur or a first-time business owner, we've got you covered. So, let's get started and help you find the perfect commercial space for your needs!

What is a commercial lease?

Before we dive into our tips and tricks, let's start with the basics. What exactly is a commercial lease, anyway?

A commercial lease is a legally binding contract between a landlord and a tenant for the rental of a commercial property. Unlike a residential lease, which is typically for an apartment or house, a commercial lease is for a property used for business purposes.

Types of commercial leases

When leasing commercial space, it's important to understand the different types of leases that are available. Depending on your business needs and budget, you may want to consider different lease options. Here are some of the most common types of commercial leases:

• Net lease: This type of lease requires the tenant to pay for property taxes, insurance, and maintenance costs in addition to the lease payment. There are three main types of net leases: single net, double net, and triple net. In a single net lease, the tenant pays for property taxes and the lease payment. In a double net lease, the tenant pays for property taxes and insurance in addition to the lease payment. In a triple net lease, the tenant pays for property taxes, insurance, and maintenance costs in addition to the lease payment.
• Gross lease: A gross lease is a lease in which the landlord pays for all expenses associated with the property, such as property taxes, insurance, and maintenance costs. In a gross lease, the tenant pays a fixed amount of rent each month.
• Modified gross lease: This type of lease is a combination of a net lease and a gross lease. The landlord and tenant agree to split certain expenses associated with the property, such as property taxes and maintenance costs.
• Percentage lease: A percentage lease is a lease in which the rent is based on a percentage of the tenant's sales. This type of lease is common for retail businesses located in shopping centres or malls.
• Annual lease: An annual lease is a lease agreement that lasts for one year and is usually renewable at the end of the term. This type of lease provides more flexibility than a long-term lease.

By understanding the different types of commercial leases, you can choose the best lease option for your business and negotiate favourable terms with the landlord.

What's included in a commercial lease?

Commercial leases can come in all shapes and sizes, depending on the type of commercial property and the landlord's preferences. For example, you might lease a storefront for a retail business, an office space for a professional services company, or a warehouse for a manufacturing business. In addition to the rent itself, commercial leases can include a variety of other terms and conditions. The lease might specify who is responsible for utilities, maintenance, and repairs and provisions for renewing the lease or terminating it early.

Now that we've covered the basics of what a commercial lease is, let's move on to our tips and tricks for getting a good deal on one!

Step 1: Assess your needs and budget

Before you start looking for commercial spaces, it's important to determine your needs and budget. This will help you narrow down your options and avoid wasting time on spaces that don't meet your business needs.

Think about your space requirements

Most commercial leases are for spaces used for business purposes, such as retail stores, offices, or warehouses. Therefore, you'll need to think about a few things before you start looking for a space.

For example, if you're opening a restaurant, you'll need to consider the size of the dining area, the kitchen space, and the storage area. If you're opening a retail store, you'll need to think about the size of the sales floor and the storage area.

By considering your specific space requirements, you can narrow down your search to spaces that meet your needs.

Determine your budget

In addition to your space requirements, you'll also need to determine your budget. This will include not only the lease payment but also other costs associated with the space, such as utilities, maintenance, and repairs.

When determining your budget, it's important to be realistic about what you can afford. Stretching yourself too thin financially can put your business at risk, while spending too little on a space that's too small can limit your growth potential.

Therefore, you should consider your business's projected income and expenses and factor in a cushion for unexpected costs. This will help you determine how much you can afford to spend on a commercial space.

By determining your needs and budget, you can narrow down your search to commercial spaces that meet your requirements and avoid wasting time on spaces that are outside of your price range. In the next section, we'll talk about researching the commercial real estate market to find spaces that meet your needs and budget.

Step 2: Research the commercial real estate market

Once you've determined your needs and budget, it's time to look for spaces that fit the bill. Here are some tips for researching the commercial real estate market:

Use online resources

One of the best ways to start your search for a commercial space is by checking online listings. Websites like LoopNet, CoStar, and CommercialSearch can help find available spaces in your desired location.

For example, if you're opening a restaurant in a busy city, you can search for available spaces in the downtown area using one of these websites. You can filter your search by criteria, such as size, price, and location, to find spaces that meet your requirements.

Another helpful online resource is Google Maps. By using the "search nearby" feature, you can find available spaces in a specific area and get a sense of the neighbourhood and its amenities.

Attend open houses and networking events

Attending open houses and networking events can also be a great way to find available commercial spaces. These events can help you get a feel for the commercial real estate market in your area and connect you with other business owners and brokers.

For example, if you're looking for a space to open a medical office, attending a networking event for healthcare professionals can help you connect with brokers who specialise in medical office spaces.

Look for hidden costs

When researching commercial spaces, it's important to look for hidden costs that can add up over time before signing on that dotted line. For example, some leases require tenants to pay for utilities, maintenance, and repairs in addition to rent.

Therefore, you should make sure you understand all of the costs associated with a space before signing a lease. This will help you avoid any unpleasant surprises down the road.

By using these tips, you can find spaces that meet your needs and budget. In the next section, we'll talk about how to negotiate lease terms to get the best deal possible.

Step 3: Negotiate your lease agreement

Now that you've found a commercial property that meets your needs and budget, it's time to negotiate a lease agreement. Here are some tips for negotiating commercial lease agreements:

Understand your leverage

Before entering into negotiations, it's important to understand your leverage. If you're looking to lease a highly desirable space in a competitive market, you may have less leverage than if you're looking to lease a less desirable space.

Additionally, you may have more leverage in negotiations if you're willing to commit to a longer lease term or offer a higher lease payment.

Get everything in writing

Once you've agreed on lease terms, make sure to get everything in writing. This includes not only the rent amount and lease term but also any additional costs such as utilities, maintenance, and repairs.

Having everything in writing can help prevent misunderstandings or disagreements down the line and ensure that both parties are clear on their obligations.

Negotiate lease terms

When negotiating lease terms, there are several areas to focus on. These include:

• Rent amount: Negotiating a lower rent amount can help reduce your overall lease costs and increase your cash flow.
• Lease term: Longer lease terms can often result in lower monthly lease payments and provide more stability for your business.
• Renewal options: Including renewal options in your lease agreement can give you the option to extend your lease and stay in the space longer.
• Tenant improvements: Negotiating for the landlord to make tenant improvements, such as installing new carpet or painting the walls, can help make the space more suitable for your business needs.

Hire an attorney

If you're not familiar with commercial lease agreements, it may be helpful to hire an attorney to review the lease terms and make sure everything is fair and reasonable.

An attorney can also help you negotiate lease terms and ensure that all necessary clauses are included in the agreement.

By using these tips, you can negotiate a commercial lease agreement that meets your needs and protects your business interests. In the next section, we'll talk about how to protect yourself from potential lease pitfalls.

Step 4: Work with a broker

Navigating the commercial property market can be overwhelming, which is why working with a broker can be a helpful option. Here are some benefits of working with a commercial real estate broker:

• Access to market knowledge: Commercial real estate brokers have extensive knowledge of the market, including available properties, lease rates, and market trends. They can help you find the right commercial space for your business needs and budget.
• Assistance with lease negotiations: Brokers can also assist with lease negotiations, helping you get the best lease terms possible. They can provide insight into the landlord's negotiating style and advise you on how to structure your lease offer.
• Time saving: Searching for commercial space can be a time-consuming process. Brokers can save you time by screening properties that don't meet your needs or budget and by scheduling property tours.
• Protection from lease pitfalls: Working with a broker can also protect you from potential lease pitfalls. Brokers can help ensure that lease terms are fair and reasonable and that all necessary clauses are included in the lease agreement.
• Cost saving: Finally, brokers can help you save money by negotiating lower lease rates and ensuring that you're not paying for unnecessary costs or services.

Overall, working with a commercial real estate broker can make the process of finding and leasing commercial space easier and less stressful. If you're interested in working with a broker, make sure to choose a reputable and experienced professional.

How can a POS system help your commercial business?

A retail point-of-sale (POS) system is a software and hardware solution that streamlines sales transactions for businesses. While a POS system is often associated with retail businesses, it can benefit any type of commercial property, such as restaurants, medical offices, and salons.

Benefits of a retail POS system

A retail POS system can help businesses in many ways, including:

• Simplify sales transactions: A POS system automates the sales process, reducing the need for manual data entry and the possibility of errors. This helps to speed up transactions and improve customer experience.
• Inventory management: A POS system can track inventory levels in real time, making it easier for businesses to manage their stock levels and avoid stockouts.
• Payment processing service: Many retail POS systems offer integrated payment processing services, allowing businesses to accept credit card payments, debit card payments, and mobile payments.
• Data analytics: A POS system can generate sales reports and analytics, providing businesses with insights into their sales trends, customer behaviours, and inventory performance.

Choosing the right POS system

When choosing a POS system, it's important to consider the specific needs of your commercial property. For example, a restaurant might require a POS system that can handle table management and menu customization, while a medical office might require a system that can manage patient appointments and medical records.

It's also important to consider the costs of the POS system, including any hardware and software fees, transaction fees, and ongoing support costs.

Overall, a retail POS system can help businesses to streamline their sales processes, improve inventory management, and gain valuable insights into their sales performance.

Final thoughts

Leasing commercial space can be a complex process, but with the right strategies and tips, you can secure a good deal for your business. Remember to determine your needs and budget, research the market, negotiate your lease, and consider working with a broker.

In addition to these tips, leveraging the benefits of a retail POS system can also help you run your commercial property more efficiently. A POS system can simplify sales transactions, manage inventory, process payments, and generate valuable analytics for your business.

Finally, it's important to remember that property owners are often willing to negotiate on lease terms, especially in a competitive market. Don't be afraid to ask for concessions or favourable terms, such as rent reductions, tenant improvement allowances, or lease extensions. With the right approach and a bit of persistence, you can secure the perfect space for your business at a great price.