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Hidden costs and other commercial leasing issues to consider

On Behalf of | May 7, 2020 | Business & Commercial Law

Perhaps you are about to launch a new business, and you need office space. 

You found the perfect site, but this is your first experience with a commercial lease. What are the most common issues to look for? 

Multiyear terms 

Remember that you are in charge of a start-up, and you expect your business to expand over time. You may need more office space before long, and you do not want to tie yourself to a multiyear lease that may stunt the growth of your company. 

Hidden costs 

Some landlords will prepare a commercial lease with hidden costs. Look for these in disguise as maintenance or repair expenses. 

Build-out expense 

The space you want to rent may be nothing more than a big, blank room at present. Is there a tenant improvement budget in the lease? If so, is it sufficient to cover the improvements you have in mind? If the landlord intends to build out the space, he or she may try to include some if not all of the build-out expense into your lease. This could be a prime area for negotiation. 

The demotion clause 

Find out what you can about any plans the landlord might have for building redevelopment. Your contract may include an option to renew, but if the landlord is considering selling to a developer, the deal may nullify your opportunity to do so. 

The problem of inexperience 

Just as you might feel you are out of your element when taking your car to a mechanic, the same feeling may surface when you are about to sign a commercial lease. You want lease terms that are flexible and that do not favor the landlord in ways that may set up unwanted restrictions for you and your business. Acknowledge your inexperience and remember that no one should rush you into signing the lease without allowing you the benefit of professional guidance.