When it comes to signing a commercial lease, it can be easy to get caught up in the excitement of finding the perfect space for your business. After all, the mere idea of having a physical location where you can showcase your products or services can be thrilling. However, before you put pen to paper, it’s essential to understand that signing a lease is a legally binding agreement, and it’s crucial to avoid making common mistakes that can harm your business in the long run. But what are the most common mistakes commercial tenants make? To answer this question, we’ve consulted experts in commercial real estate, and let’s take a look at six mistakes and how you can avoid them.
Avoid the most common mistakes commercial tenants make.
Finding the perfect commercial property for your business can be a daunting task, especially if you don’t have experience in the process. The search for the right location, size, and price can be time-consuming and overwhelming. However, it’s a crucial step in the growth and success of your business.
Unfortunately, the process does not end with finding the perfect space; the next step is signing a lease, which is a legally binding agreement that requires careful consideration. However, knowing what mistakes to avoid during the leasing process can make it much easier and less stressful.
Therefore, this article will explore the common mistakes commercial tenants make when signing a lease and how you can avoid them. By taking the time to understand the lease terms and negotiate a lease that’s right for your business, you’ll be able to set yourself up for success. Now let’s help you find the commercial property of your dreams.
#1 Not Hiring Your Own Broker
One of the first and most common mistakes commercial tenants make when signing a lease is not hiring a commercial real estate broker. Many tenants assume the landlord’s broker is working in their best interest, but this is not the case. A landlord’s broker is working on getting the best deal for the landlord, not the tenant. Therefore, hiring your own broker will ensure that you have someone looking out for your best interests while helping you negotiate the best terms for your lease.
A good broker can help you identify potential red flags and comprehensively analyze the lease terms, including rent and other costs. On top of that, they might be able to help you even after you’ve signed the lease. For instance, they can help you hire movers for your commercial move. Not all movers are equally qualified, and chances are your experienced real estate broker will be able to recommend the right people for the job.
#2 Not Visiting the Space During Peak Hours
Another very common mistake is not visiting the space during peak hours. It’s easy to fall in love with a space when it’s empty and quiet, but it’s important to see how it functions during the times when you’ll be using it the most. A visit during peak hours will give you a better idea of how busy the elevators and parking lot are and if the space will meet your needs. Additionally, it’s crucial to check the condition of the space, the quality of the construction, noise inside the space during peak building hours, HVAC, elevators, parking, and accessibility in and out of the building.
#3 Not Finding Out Deal Terms from Other Recent Deals in the Building
Many tenants fail to find out the deal terms from other recent deals in the building. However, this could be a crucial piece of information that is typically only available through a well-connected commercial real estate broker. Knowing what other tenants have negotiated in the building can give you an idea of what is possible and what the landlord is willing to offer. Not finding out these terms can result in a lease that is not as favorable as it could be. Therefore, it’s essential to understand that the terms of the lease are negotiable. It’s also crucial to have a good understanding of the market conditions and comparable deals in the area and in your prospective building.
#4 Not Building Flexibility into Lease Terms
Building flexibility into your lease is one of the most important things to consider before signing a lease on any type of commercial space. Not doing so is one of the oversights tenants, especially inexperienced ones, commonly make. Building flexibility into the lease terms includes things like the right of first refusal on adjacent space, the right to sublet, and the right to terminate early.
These are important clauses that can give you the flexibility you need to grow your business or adapt to changes in the market. Neglecting to include these clauses in your lease can limit your options and leave you stuck in a space that no longer meets your needs. Always remember that it’s essential to have a clear understanding of your business needs and objectives and to negotiate a lease that aligns with them.
#5 Not Letting the Landlord Handle the Tenant Improvements
Some tenants fall into the trap of volunteering to handle the tenant improvements themselves. This can be a costly mistake, as it can be difficult to find reliable contractors, and the costs can quickly add up. Unless you are a very large tenant with contacts to reputable and experienced contractors, it’s typically best to let the landlord handle the tenant improvements.
This can help save you time and money, as the landlord is responsible for getting the necessary permits and ensuring that the work is done to code. Additionally, by letting the landlord handle the tenant improvements, you’ll have the peace of mind that the work is being done by a professional and that any issues that arise will be the landlord’s responsibility to resolve.
#6 Not Reading the Fine Print
It’s easy to get caught up in the excitement of finding the perfect space and neglect to read all the details of the lease. However, it’s essential to read the lease thoroughly and make sure you fully understand all the terms and conditions before signing it. Not reading the fine print can result in unexpected costs and headaches down the road.
The Bottom Line
Signing a commercial lease is a big decision and one that should not be taken lightly. By avoiding the most common mistakes commercial tenants make, as we outlined in this article, you can ensure that you are getting the best deal for your business and setting yourself up for success. By taking the time to understand the lease terms, you’ll be able to negotiate a lease that’s right for your business and avoid costly mistakes in the long run. Most importantly, make sure to have an experienced real estate broker on your side.
Contact Pam Pester for all commercial real estate in Tampa Florida, tenant representation throughout the Tampa Bay area and sublease information for businesses and companies.