A commercial lease can play a significant part in your company’s success. Therefore, it is critical to negotiate the lease so that your office, warehouse, or retail space fits every one of your needs.
It is amazing to think how some of the country’s most successful businesses started in their owners’ garages. Companies like Apple, Hewlett Packard, and Google have all since moved from the garage to more suitable surroundings for multi-billion dollar businesses. These success stories demonstrate that a good idea and an entrepreneurial spirit can overcome even the slimmest budget. They also demonstrate the more practical need that most growing businesses will face at some point—the need to enter a commercial lease.
Most people have had some experience with residential leases, and many small businesspeople may assume that entering a commercial lease will involve a similar process and terms. Namely, they may think that there will be little room for negotiation and a relatively short term of obligation. However, this is usually not the case and failing to fully understand and negotiate the terms of a commercial lease can significantly disadvantage a small business.
Commercial leases are often long-term and give the tenant much more control over the property than a residential lease would. Because of their long-term and more ownership-like nature, commercial leases can be valuable assets for a business. At some point, you may want the ability to transfer this asset to a buyer willing to pay a premium for the lease’s favorable terms. If so, you’ll want to negotiate a lease provision that allows you to make these types of transfers.
Business owners should enter commercial leases just as carefully as they would any other business transaction. Both the landlord and tenant are businesspeople, and both sides should be prepared to approach the transaction as businesspeople would—open to negotiation and amendable to a mutually-beneficial outcome. If you find your potential landlord is unwilling to negotiate with you, find someone who will.
Know what you want out of a commercial lease, and don’t settle for any less. Always make sure that you understand and agree to each term of a lease, and if you don’t, change it. Moving out of that garage is an exciting step for your company, and the place you are moving should be worth your investment and fit all of your company’s needs.