Avoid These Common Mistakes
Over the years, we have seen a lot of mistakes when business owners sign commercial leases. In fact, we are often called in to clean up the mess that a less skilled agent or a business owner has created. Here are some things to pay attention to before signing a rental contract.
Common Area Maintenance
Common Area Maintenance, otherwise known as CAM, refers to the fees you will be charged for the maintenance of the facility’s common areas. This fee should be proportional to the percentage of the building you are leasing.
Many people fail to read the fine print about what is included in the CAM fee. They also fail to look at the schedule for CAM fee increases. This oversight often leads to surprise bills that the business owner did not fully account for. Make sure you pay close attention to these fees so you’re not caught off guard with a bill later.
Capital Expenditure Liabilities
Some landlords like to try and shift responsibility for capital expenditures, like HVAC replacement, onto tenants. They are often successful because people do not read the contract carefully.
Through initial negotiations, you should try to reduce your liability for capital expenditures. Always be specific and ensure any clauses note exactly what you will and will not be responsible for.
When starting a new lease, you rarely think about moving again or selling the business but it is an important consideration. You always want to make sure you can transfer or ‘assign’ the lease to someone else. This will help when you want to sublet the space, sell the business or move to a new space in the future.
Many commercial lease contracts allow the landlord to terminate a lease if you seek an assignment. Through initial negotiations, you need to remove or amend this clause if possible.
Especially with warehouses and light industrial spaces, you need to pay close attention to zoning requirements. Just because there are similar businesses nearby and your landlord is fine with you setting up does not mean you will be granted permission by city planners.
Before you even get close to signing a lease, you need to ensure you can get zoning approval. The last thing you want is to sign a lease only to realize you can’t move your business into the new space.
Even if you are happy with the standard lease agreement, you should always negotiate. Some people become emotionally attached to an area or a particular building and sign with little to no negotiation.
By signing too quickly, you miss out on the opportunity to get concessions and savings that most landlords are happy to give. Don’t sell yourself short and think about how to reduce unplanned costs.
Instead of wading into the muddy waters of lease negotiations on your own, the best way to get a good deal is to use a professional real estate agent. With the help of one of our experienced agents, you can avoid all these common mistakes and move into your new warehouse space sooner. Here’s how you can contact us.