How to Negotiate a Great Lease for Your Startup

How to Negotiate a Great Lease for Your Startup

In the process of starting and growing a new business, there are a lot of hurdles than entrepreneurs have to face. One of those hurdles is the cost – starting a business is expensive, and leasing office space is one of the biggest expenses a young company will incur. Therefore, it’s extremely important to know how to negotiate for the best possible lease. This can save you money that can then be redistributed into other parts of your company. Every lease is different, but the following tips will help you learn what to look for and how to make sure you get a lease that meets the needs of you and your company.
            Of course, you’ll need to note that your ability to negotiate a lease depends on how much leverage you have, so scout around. Find out if there are other companies that are interested in the space you’re looking at, and how long it’s been vacant. This will let you know how much leeway you may or may not have when it comes to negotiating the exact terms of the lease. So, some other things to think about:

The Lease’s Length

The Lease’s Length

           Finding a new tenant can take a lot of work, so landlords are often willing to work with you on lease terms if, in return, you’re willing to commit to a longer lease. On the other hand, if your needs change, you may end up stuck in a lease that’s too small, too big, or too expensive. If you can, sometimes a compromise is the best option – look for a shorter-term lease with the option to renew, and you may be able to get the best of both worlds.

Rent Escalations

            A steady rate for rent is relatively uncommon over a long period of time. This makes sense – housing markets get more expensive, and there’s always inflation, so landlords have to raise the rent over time. Sometimes, this takes the form of annual, percentage-based increases connected to the Consumer Price Index (CPI). This is often negotiable, to some extent. You can try to make a deal for a rent increase that doesn’t kick in until after the first two years (at least), or try to negotiate for a cap on how much the rent can increase per year. You can also negotiate ahead of time for a fixed increase, rather than one based on the CPI.

Improvements

            Many leases state that the tenant may not make unapproved alterations or improvements to the property. But, the space may need some improvements in order to fit your needs, so ask for a clause that will allow you to 1) make those improvements with the landlord’s consent, and 2) provides that the landlord cannot unreasonably withhold or delay that consent. Since improvements raise the value of the property, your landlord may be willing to give you a tenant improvement allowance, a pre-negotiated amount of money that the landlord will provide you to make the improvements you want.

Repairs and Replacements

            Many leases contain a clause that states that at the end of the lease, the premises must be in the same condition that they were in at the beginning of the lease. Try to negotiate for a clause that will exclude ordinary wear and tear, fire damage and damage that wasn’t the tenant’s fault, and (of course) any landlord-approved alterations or improvements.

Assignment and Subletting

            As a growing company, you need to prepare for possible mergers, changes to share ownership, and other types of reorganization. Make sure you negotiate for an Assignment and Subletting clause that is flexible enough to accommodate these possible changes.

Shop Around

            Be aware that the terms “usable square footage” and “rentable square footage” are not the same, and they are not interchangeable. Remember that a space’s useable square footage is always less than the rentable square footage. This is because “usable square footage” excludes common areas – for example, hallways, elevators, bathrooms, and lobbies – so don’t compare two spaces that have different units listed; make sure you’re comparing apples with other apples, and nothing else.

Think About Subleasing

            Sometimes companies grow and take up more space over time. Other times, they shrink, and some older companies end up with a large space that outsizes their needs. You may be able to find a good deal subleasing office space from a company like this. Subleasing also comes with a handful of potential advantages over a direct lease: The space is already in use, so any needed improvements are probably already in place, t may be cheaper and easier to get than your own dedicated facility, and you can probably get a shorter lease term (so you won’t be trapped if it doesn’t work out).

Of course, in addition to the other company, you’ll also be beholden to the terms of the original lease with the landlord, so don’t skim that document.

Letter of Intent

            It may be helpful to begin your negotiations for your space by presenting the landlord with a letter of intent. This is a good way to start out the negotiations with your essential terms already on the table: lease rate, term, renewal options, improvement options, et cetera. After laying the groundwork with the letter of intent, you can negotiate for a lease that both parties will find satisfactory.

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9 Commercial Real Estate Trends to Dominate 2019

9 Commercial Real Estate Trends to Dominate 2019

The commercial real estate market is already forecasting 2019 to be a year of significant trends that are sure to surprise even the most adept agent. From a shift in industrial absorption and the development of new zones of opportunity,there is no lack of substantial changes occurring in the sector. Let’s look at nine critical trends that you will want to keep your eye out for this year.

1. Hipsturbias

The name may sound funny, but if you’ve never heard it, you have not been paying attention.These areas continue to grow by housing recently married millennials who want to keep the hustle and bustle of the city but wish to tone things down a bit. “Urban-burbs” as they are also called are suburban areas that allow for easy access to public transportation and have several businesses within walking distance of the home.

Millennials are flocking to these precious gems because the housing is much cheaper than in the city, and this means that the retail landscape of those areas is soon to change to accommodate the newly minted homeowners. You can expect to see more health conscious supermarkets, quaint coffee shops, book stores, and more avocado toast. This is a trend you want to sink your teeth into right away.

Construction Costs Rising

2. Construction Costs Rising

This is a story carrying over from 2018. Construction costs are rising due to problems with the labor force and difficulty getting prime materials due to the trade war. Steel, porcelain, lumber, and other vital materials come from Canada, China, and other countries that have been sparring with the USA for some time now.

For the commercial real estate market, this is alarming as it means that setting up new businesses or production facilities can really hurt margins and ultimately affect the bottom line of any investor. Hopefully, the volatile political climate will ease as the year progresses, but in the meantime, it is better to be well-informed.

3. Hotel Occupancy to Continue Rising

This is a trend that has been going on for almost a decade, and we can expect more of the same in 2019. Hotel occupancy is expected to rise to nearly 67% according to the STR, and they say that it is mostly due to the high demand that offsets the incoming supply. This continued surge is impressive as businesses like Airbnb have really made a dent in the hospitality industry,and yet hotels seem to be coping with its effects.

For commercial real estate connoisseurs, this means increased business traffic yearly via conventions, events, and other events that are sure to drive profits and give the market yet another boost this year. Keep your eye out for the numbers at the end of the year, too, as 2020 is already looking good.

4. More Warehouse Developments

Amazon recently became ILPT’s largest tenant, and warehouse developments continue to grow as the internet swallows more and more commercial space. The warehouses of today are entirely different from those of old.They tend to be multileveled and store various products.

The operations managers in these new warehouses will have their hands full with all the changes, but it is essential that the savvy commercial real estate agent pay close attention to how it all unfolds as this could mean yet another spike in warehouse developments next year.

5. Hope for the Best but Expect the Worst

We don’t want to be grim here, but as the economy nears a full decade of expansion naturally, everyone fears a new recession at any moment. Downturns generally occur a couple of years after employment levels hit peak levels, and while there no tell-tale signs at the moment,it’s always better to be safe than sorry.

There may not be any need to mention that real estate is not resistant to business cycles and can be heavily impacted by even the slightest downturn in the economy. Keeping a close eye on the subject and keeping a “beware the good news” attitude is not the worst thing that can be done this year.

6. Less Brick and Mortar Retail Bankruptcies

A lot of once-significant players in their respective industries shut their doors last year, including established brands like Sears, Claire’s, and Brookstone. The trend is expected to continue this year but with a bit of a slowdown. Brick and mortar retailers are beginning to adjust to the ever-increasing presence of online shopping, and closing certain locations is often how they are changing and avoiding bankruptcy. Stores are focusing on their online presence, and this can only help them in the long run. The animal is not dying; it is merely adapting to change.

7. Groceries Moving Online

Similar to other retail locations, grocery stores are feeling the pressure of new home delivery services that are making life a lot easier for families at home. Commercial real estate players should expect to see more significant chains focus their attention to online services while also closing down major locations in urban areas.

The grocery store transformation will likely be much slower than in any other retail business, but it is essential to see what moves they make in 2019 as the internet continues to penetrate the way that stores in almost any industry do business. Everyone needs groceries, but how they get them will come down to grit.

8. Demand for Office Space to Slow Down

While at the moment stable, the office space leasing sector may see a very slight slowdown in need this year as employment numbers seem to settle. The trends of 2018 in this area are being put into question, and yet the come-down is not expected to be too harsh. Start-ups and established companies are coasting at the moment and barring some major change, everything in the office space world looks to be business as usual.

9. Commercial Real Estate Tech Boom

Commercial real estate players can expect more help this year as start-ups are being offered new technology by global fund investors who want to see even more growth in the industry. The many technological advances that are coming are sure to impact the industry in many ways. You can be sure that your competitors are already making room for more tech in their portfolios and that means you should, too.

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Open Plan Offices – A Failed Experiment?

Open Plan Offices - A Failed Experiment?

If you’re searching for commercial space for rent you might be considering moving into a building with an open plan design. While this office design is great in theory you might want to rethink the type of office leasing you’re looking for – open plan offices have a few problems that may affect the workflow of your employees. 

The theory of an open plan design is sound. The lack of small, enclosed rooms (such as private offices) coupled with a wide, open layout theoretically should encourage workers and managers alike to interact with one another and prompt collaborations.

However, a fairly recent study has revealed that workers are doing the exact opposite of collaborating with one another — they’re keeping to themselves more than ever. To conduct the study, researchers used microphones and electronic badges to track email use and the level of interaction among employees.

The study revealed that employees had decreased face-to-face interactions by 73%. Instead of interacting with one another employees buried themselves in text messages and emails which both saw an increase of over 67%.

What's the Argument for Open Plan Offices?

What’s the Argument for Open Plan Offices?

The concept of open plan office spaces seems like a great idea. Studies show that our social environment contributes significantly to our ability to stay motivated and work that much harder. Furthermore, work environments today are places where “playing well with others” has become more essential than ever.

That’s why the idea of an open plan office makes complete sense. The workplaces that have higher interaction amongst employees tend to not only improve work output but also improve job satisfaction, as well.

One major influencer of employee productivity, job satisfaction, and improved willingness to collaborate with others is the design of the workplace (theoretically anyway). The entire point of the open plan office concept was to create a wide space that discourages independent work and encourages more social interaction.

The open plan office concept was all about creating a sense of community — solo work would be reduced in favor of a group based effort which would (theoretically) improve overall work output.

It turns out workers need one vital factor to concentrate – privacy

One aspect of productivity that the open plan office design didn’t take into account was the fact that employees require privacy to get work done. Imagine yourself in an open plan office — every movement, every bit of conversation, every individual — all visible to you and serving as distractions from your work.

On average it takes about 23 minutes to get back on track after you’ve been distracted. Thus, employees try to make up for these distractions by expending additional mental energy to regain their concentration. As a result, they tend to communicate even less with their coworkers, research shows.

During these periods of constant distraction workflow is interrupted, and the employee will likely perform at a lower level than average. Efficiency and productivity will decrease, and mistakes will arise.

Focus is the key word here. The failure of open plan offices lies with the fact that employees aren’t able to focus. There are just too many people doing too many things in too dense an area for anyone to truly concentrate on their work.

What the cubicle design gets right is that it allows employees to bury themselves within their own little world as they focus on their work, free of distractions. Focused work is the key to productivity. When focus is taken away so is an employee’s ability to stay truly productive.

Why aren’t employees making more of an effort to collaborate?

Whether intentional or not, open plan offices were designed to increase collaboration and interactivity at the expense of concentration and focus. The problem with this concept is that employees expend emotional and cognitive resources attempting to make up for their lack of focus. As a result, they’re not as willing to collaborate with others.

Further research indicates that the combination of lack of privacy along with increased crowding in the workplace often puts workers on the defensive and office relationships are strained as a result.

The real reason why open plan offices fail

There’s no such thing as a one-size-fits-all for office designs. As individuals, we all view workplaces differently. Where one person may find an open plan office to be the perfect environment for getting collaborative work done another person may see it to be incredibly distracting.

Concentration and focus will always be the foundation of productivity. That’s why organizations should attempt to find a workplace solution that not only allows employees to have a certain degree of privacy (which leads to increased focus) but also fosters the need for more interactions amongst employees.

If you happen to be searching for office space for rent in Clifton Park, we can accommodate you. Atrium properties has over 40 years of experience in building and managing office buildings. We always ensure our tenants are paired with the ideal commercial property for rent because we know that if our tenants are successful, we’re successful. Contact us today for more information.

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What is the best way to find commercial office space for rent?

What is the best way to find commercial office space for rent?

Finding the perfect commercial office space for your business takes time, effort, and a willingness to do in-depth research. Moving into the wrong type of office space can have disastrous results for your business. For example, if you pick an office space based in the wrong location (little to no traffic, significant security issues, hard to physically locate), then you can expect your business to suffer on multiple levels.

Other factors such as size, rent, and overall budget also play a significant role in the type of office space you should choose for your business. Identifying the best way to find commercial office space for rent can seem like a daunting task from the surface, but focusing on the essentials will make your task that much easier.

Let’s breakdown the best way to find commercial space for rent.

1) Create a shortlist based on your budget

Creating a shortlist doesn’t just help you find the perfect office building for your business — it also saves you time and money. Rent can vary depending on the locality, so weeding out the office spaces that are outside of your budget range will ensure you don’t waste time looking at commercial spaces that aren’t well suited for your business.

2) Consider how much space you need

Space is one of the most important factors you need to take into account when you’re choosing a commercial office to rent. How large does your office space need to be? Small? Medium sized? Large? Understand your needs in terms of space before setting out on your search. As you determine the right size of your office space consider the number of people you employ, whether or not you intend on having customers visit your office, and so on.

3) Furnished vs. unfurnished office space

Depending on who you speak to this option may seem like a luxury. Despite this, you should consider the pros and cons of moving into a furnished vs. unfurnished commercial office space. The obvious drawback of moving into a furnished office space is that the extra amenities will likely cost you more each month in rent.  However, one major advantage is you’ll potentially save hundreds of dollars upfront because you won’t have to purchase (and transport) your own furniture.

4) Business centers

Business centers are a great place to start for many companies. Even some of the most reputable businesses base some of their branch offices in business centers. Business centers are useful because they handle the hassles of administrative work that businesses deal with during their day to day proceedings. This will free you up to focus on what matters most — growth and revenue generation.

5) Look for well-known office complexes in commercial areas

Why should you look for office complexes? That’s because well-known spaces such as these are known for providing the best amenities for their office spaces such as water, central air conditioning, electricity, and more.

6) Look for online listings

There are plenty of online listings out there that will help you track down the perfect office space for your business. Listing sites such as LoopNet and Zillow do a fantastic job of listing properties available in your area of choice. You can also turn to broader sites such as Craigslist. While Craigslist provides a wide variety of services, it has proven to be an effective resource for finding available commercial property. 

There are many online listing sites to choose from. Do your homework and focus primarily on the most trusted sites. The two qualities a good listing site should have is time efficiency and accurate listings. Ensure the site is always kept up to date (otherwise you’ll just be wasting your time). Also, you should be able to navigate the site with little to no issue.

Final thoughts

Choosing the right type of commercial space for your business takes planning and time. Making a choice without thoroughly analyzing the needs of your business could lead to you making the wrong choice — a decision that can haunt your business for years. Take your time, do your research, and execute your strategy. With enough diligence, you’ll be able to identify the best commercial office space for your business.

Looking for a commercial space in the Clifton Park area? Contact Atrium Properties today. We’ll match you to an office space well suited for your business. With more than 40 years of experience building and managing buildings we know what it takes to make our customers happy. Contact us today for more details.

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5 Benefits of having a Green Office Space

5 Benefits of having a Green Office Space

Choosing to go green in your office space comes with a number of benefits. These include cutting back on paper usage, reducing waste, cutting energy costs, providing a better work environment for employees and much more. Let’s break down 5 benefits of having a green office space and how you can go about making your office space greener today.

1) Increased Productivity

When compared side by side, the employees of green offices tend to show more productivity than their counterparts in non-green work environments. Employees tend to have more pride in their work when their employers are environmentally responsible which encourages them to work that much harder. More and more businesses are becoming aware of this spike in employee productivity and have begun to go green just to improve productivity in their own offices!

2) Happier and healthier employees

Whether you realize it or not the health and mood of your employees can be directly affected by the environment where they work. From air ducts exposing employees to unhealthy air to drab color schemes painted on every wall in the building, the work environment often has a direct impact on how your employees perform. Changing this atmosphere by going green is often the medicine needed to make employees happier and healthier to boot.

Office plants add liveliness to any office environment. As an added benefit, plants can also catch the containments in the air, making the work environment that much healthier. Throwing flowers into the mix will provide the office with a fragrant aroma for your employees to enjoy. Also, you can’t beat the mood improving bright colors you’ll be adding to the space!

3) Lower Bills

Going green doesn’t just allow businesses to reduce their environmental footprint. It also saves them a lot of money. Every green step that an office makes, from using natural lighting to recycling, reduces overhead costs and ultimately impacts the bottom line positively.

4) Improved company image

Image is everything in the business world. A bad reputation not only reduces your chances of attracting new clients, but can also repel potential future employees. Both newer employees and customers appreciate a company who makes an effort to go green. You’ll be seen as caring about more than just your bottom line — you’ll project a message that you care about your employees and the environment.

5) Positive impact on the environment

Humanity has done significant damage to the environment. With millions of vehicles shooting pollutants into the air, companies dumping corrosive chemicals into the ocean, deforestation and more every little bit helps when it comes to fixing the damage we’ve caused. Having a green office space reduces this impact even if it’s only ever so slightly. It’s simply the right thing to do, and hopefully, more businesses will follow your lead as you continue promoting green practices on a daily basis in your office environment.

Tips on how to go green in your office space

Going green may be easier than you think. Here are a few ways you can go about reducing your impact on the environment in your office space:

  • Switch to organic cleaning supplies that are non-toxic.
  • Lower your utility bills by using office equipment optimized for reduced energy consumption, changing the energy settings on your computers and handheld devices, and replacing all of your standard light bulbs with compact fluorescent bulbs.
  • Start slowly and change one or two things at a time. You can start with changing the settings on your computers and handheld devices and then move on to changing out your light bulbs. If you make the process of going green gradually, you may be surprised at the transformation of your office a month down the road.
  • Coach your employees on how to be green. Have them get into the habit of turning off lights, use reusable cups, forks, and knives, and so on.
  • Do everything you can to reduce the amount of paper you’re using in the office every day. Use recycled paper when you can and reuse shipping and packing materials.
  • Encourage your employees to reduce their environmental impact by carpooling with fellow coworkers. You can also try to condense work schedules to reduce the number of days your employees have to drive to work. Telecommuting is also an option.
  • It isn’t difficult to recycle used cans and bottles. Recycling becomes a problem, however, when recycling bins and are not easily accessible. You can remedy this issue by placing recycling bins next to the workstations of your employees. That way there will be no excuse when it comes to recycling.

Going green in your office space

Going green is the way of the future. If you find yourself falling behind the times, you may find it harder to attract future employees and customers. With the many benefits of transforming your office space into an ecologically friendly environment, there’s no reason why you shouldn’t think about going green with your office space today.

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Find and Lease Clifton Park Office Space for Rent in 6 Easy Steps

Find and Lease Clifton Park Office Space for Rent in 6 Easy Steps

If you’re searching for office space in Clifton Park, there are a number of steps you need to keep in mind before taking action. Factoring in your potential growth, budget, and current needs (amongst many other factors) is essential to choosing the perfect building for your business.

The commercial space you lease is often crucial to the success of your business — making a wrong decision can have a lasting negative impact that can affect your business for years to come.  Let’s break down the 6 essential steps you need to find an office space for rent in Clifton Park.

1) Determine your office needs

As you search for your ideal office space, one of the first things you need to do is ascertain the needs of your business and your employees. Answer the following questions to help you identify your needs:

  • How much space do you need?
  • What’s your overall budget?
  • What class of office space do you require?
  • What should the office layout be?
  • Do you have enough space if you grow?
  • What are your parking requirements?

Considering every possibility will help to paint a picture of the perfect office building for your business. For example, leasing a large office space with extra square footage will leave room for future growth.

You must also consider the location of your office rental. Will you be in an area that attracts decent foot traffic? How accessible is your commercial space?The building you choose should be convenient not only for your customers but also for your suppliers and employees.

2) Estimate your budget

Your budget will ultimately determine the type of office space you will be able to lease. You can estimate your budget by analyzing your financial constraints, your needs for space and services, and local rental costs. You can gain an accurate picture of the budget you’ll need by multiplying the average local price per square foot by the space requirements of your business. When you’ve made that calculation, add in utility and maintenance costs to help you determine a budget that’s realistic.

Once your budget is set, you’ll have a good picture of what type of building you should be looking for. For example, if you only have a budget to accommodate a Class C office building, you won’t waste time looking at Class A and Class B buildings.

3) Locate the office space that meets your criteria

There are two ways to locate a property in Clifton Park. First, you can do so yourself by searching through online listings. Second, you can hire a broker to do the heavy lifting for you.

Hiring a broker comes with a wide range of advantages. A good broker will have local insight that you may not have and will help you during lease negotiations. Brokers bring specialized knowledge to the table and it’s their job to get you the best deal possible.

To simplify your search in the Clifton Park area, reach out to Atrium Properties. They’ll get you into a commercial space quickly so you can get your business up and running without delays.

4) Tour available office spaces for rent

During your search, you’ll likely find many suitable office spaces for rent. When your search has concluded you’ll want to narrow your search down to the most promising commercial properties that meet your criteria and schedule a tour.

Before going on the tour you’ll need to do your due diligence and conduct research on the building. Keep these considerations in mind when you’re considering a specific commercial space:

  • Surrounding area
  • Security features
  • Other tenants
  • Ease of access
  • Age of building mechanicals (air-conditioning units, elevators, plumbing, etc.)
  • Parking availability
  • Office amenities

Taking note of these considerations will help you to determine whether or not a particular office space is a good fit for your business.

Working with a commercial brokerwill make this process more relaxed because they will provide the background information on each of the properties you decide to look at and they will schedule the walkthrough on your behalf. Working with a broker will also ensure all of your questions and concerns will be answered.

5) Collect and organize the proper financial information

The financial position of your business will play a substantial role in the commercial spaces that will be available for you to rent. You’ll need several pieces of vital information that will help your landlord determine whether or not you’ll be an excellent commercial tenant. This information includes:

  • References
  • Profit and loss statements (at least two to three years, however, this may not be possible startups)
  • A current credit report
  • Balance sheets
  • Bank records
  • Tax returns

Having your financial information ready will save you time and energy because it will allow you to move forward the moment you find a suitable rental space.

You should also sign a personal guarantee which is a statement that communicates that the owner of the business will comply with the terms of the lease. A personal guarantee is binding even if you leave before the term of the lease has ended. Signing a personal guarantee will be another gesture to your landlord that you will be able to cover your rent even if your business is unable to generate enough revenue to cover the cost.

6) Make your choice and move on to the negotiation phase

You will eventually come to a point where you will find the ideal office space that meets your criteria. Next, you will negotiate the lease with the landlord. Knowing the various types of leases out there and how they work will give you an edge during the negotiation phase which will ultimately allow you to negotiate better terms for your lease.

There are three lease types for commercial spaces you should be aware of:

Full-service lease

Under this lease type, the landlord holds most of the responsibility. They will pay all expenses associated with the commercial space that includes repairs, maintenance, property taxes, insurance, utilities and janitorial services. Full-service leases are the most common type of lease.

Net lease

Under this lease type, the tenant pays less rent annually in comparison to a net lease but will be required to pay monthly “usual costs” which include property insurance, common area maintenance (CAMS) fees, and property taxes.

Modified gross lease

Under this lease type, the tenant covers the fee for property insurance, property taxes and CAM fees in a lump sum which is paid alongside the rent. The advantage of a modified gross lease is that the rent will be fixed therefore the tenant won’t have to worry about hidden fees.

Leasing office space in Clifton Park

Before searching for office space to lease in Clifton Park, it’s essential you ascertain the needs of your business, budget, and plans for growth.  Going in unprepared will likely force you to settle for anoffice space that isn’t ideally suited for your business.

If you’re looking to simplify your search and find the perfect commercial space for your business, contact Atrium Properties today. With more than 40 years of experience the professionals at Atrium Properties will help you find the perfect Clifton Park commercial space.

How to Calculate Commercial Rent

How to Calculate Commercial Rent

There are a variety of ways of calculating commercial office space for rent. Which calculation you use often comes down to the type of tenant business renting out the space. However other factors to take into consideration include business revenue, the state of the economy and so on.

In some cases, a tenant is allowed to pay lower lease payments during periods where they’re expected to make less revenue. This is where the demand cycle comes into play. There will be some months that do better than others due to the ebb and flow of customer demand.

It’s up to the tenant and the landlord to work out a lease agreement that will satisfy both parties.

What types of rental properties can you find?

There are many types of commercial rental properties. These include:

  • Retail space
  • Strip centers
  • Professional offices
  • Shopping malls
  • Freestanding buildings converted into office spaces

Sometimes it can be difficult to find a good commercial tenant. Businesses that have experienced success rarely change locations unless they’ve outgrown their current location. However, if a good tenant shows interest in one of your office rentals (emphasis on good tenant), you can potentially enjoy years of steady, dependable rental income.

In addition, if the space is located in an area with high foot traffic, your tenant will want to continue leasing the location for a long time. The business world is often uncertain, and there’s no guarantee that moving to a new space will allow them to experience the same level of success as they have in their current rental space.

Lease Types

There are various lease types to consider when you have commercial property for rent.In most cases, the lease type is determined by the type of tenant business moving into the office space for rent. Let’s break down each lease type, analyzing how they work and how they’re calculated.

Percentage Lease

Businesses must adhere to demand cycles, meaning they will have their good months and bad months in terms of cash flow. Factors that affect the demand cycle includesthe location of the office space for lease and the economy. If the economy isn’t doing well, for example, there’s a good likelihood that business will slow and cash flow will begin to trend downward for a time.

With these factors in mind, landlords and tenants sign a percentage lease in which the landlord determines a minimum base rent (typically an affordable amount the tenant should be able to work with despite demand cycles), and then have the tenant pay a percentage of their retail gross income along with the base rent amount.

Percentage leases benefit both the landlord and the tenant because during months where business may be slower, the tenant will be able to pay less and stay afloat. On the other hand the landlord benefits because they will receive more rent when business begins to pick up. It’s a win-win for both parties.

You can calculate a percentage lease in two ways:

  • Minimum base rent + percentage over a certain base amount

With this particular calculation, the tenant will pay an agreed-upon minimum base monthly rent, and then add together the percentage of all gross receipts over a specific base amount. Let’s look at an example.

Let’s say base rent per month is $1,200, and 3% of all gross receipts over $45,000 per month. If one month’s gross receipts come out to $80,000 we can calculate the equation in the following way:

$80,000 – $45,000 = $35,000

$35,000 x .03 = $1,050

$1,050 + base amount of $1,200 = $2,250

  • Minimum base rent + percentage of all gross receipts

This calculation is a bit different in that you don’t wait to see what your bottom line revenue is going to be for the month before you calculate the percentage. Essentially, rent will be paid on all gross receipts from zero. Let’s look at an example.

$1,000 base rent + 3% of all gross business receipts. Thus, we would take 3% of the entire $80,000 (using the previous numbers) and add that to the base rent. You can calculate that with the following equation:

$80,000 x .03 = $2,400

$2,400 + $1,000 = $3,400 monthly rent

Rent Per Square Foot

When calculating usable square feet, understand this is the actual amount of space that the tenant is occupying. Rent per square foot is often used when multiple tenants are sharing the same building. Keep in mind there will be parts of the building that both tenants will use such as lobbies, elevators, hallways, bathrooms and so on. These are called common areas.

When it comes to paying rent on the common areas, the number of square feet for these spaces (hallways, elevators, etc.) is typically divided amongst both tenants at a prorated amount. Both tenants will pay a portion of the landlord’s expenses for these shared areas.

When you’re doing a calculation for rent per square foot, rent will be set at a base amount per square foot of the commercial space. You can calculate this amount either monthly or annually.

Annual example: A 2,000 square foot office space has a rent of $12.00 per square foot.

The equation for this calculation is as follows:

2,000 x $12.00 = $24,000 Annually

You can then divide the above number by 12 months to get your monthly rent (example):

24,000 / 12= $2,000 per month

Conclusion

Commercial space rent negotiation can be complicated at times. Business tenants need to know how much they’re spending on operating costs so they know exactly how much they can spend on rent each month while still leaving room for profit. On the other hand, landlords should have their costs of ownership firmly in mind. Therefore, each party should strive to meet at a middle ground where they will both benefit and be happy with the arrangement.

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Commercial Property Classifications & Types of Office Spaces

Commercial Property Classifications & Types of Office Spaces

If you’re looking for a commercial space for rent, it can be understandably difficult to pin down the perfect location. After all, with all of the various types of commercial property classifications and types of offices for lease to choose from it can all get a little bit confusing.

Don’t worry. We’ve assembled a guide to help you differentiate the various commercial property classifications to help you stay ahead of the curve as you search for the perfect commercial property for rent.

Understanding the different classifications of office spaces  

Generally, office spaces are separated into three categories — Class A, Class B, and Class C. Each classification is usually determined by  a number of factors that include aesthetics, amenities and the age of the building. Let’s take a more in-depth look at each classification type.

Class A Office Space

Class A office space provides the best of the best when it comes to amenities and location. For example, Class A office leasing typically comes with on-site workout facilities, massive media centers, cafeterias, conference rooms and much more.

Typically, Class A buildings are either completely brand new or have been significantly improved over the past few years. It terms of positioning, Class A buildings tend to be located in busy locations such as major roads, the center of business districts and anywhere else that’s generally busy with pedestrian traffic. An example of a Class A building would be a skyscraper located in the downtown area of a major city.

The amenities and prime location of Class A buildings come at a price, however. Rent is astronomical, but of course, if you’re leasing a Class A space, your business likely makes enough to easily cover the expense.

Class B Office Space

Class B Office Space

Class B office rentals are also excellent locations for respectable businesses to set up shop, but they aren’t quite as nice as Class A buildings. Class B office buildings are great alternatives for businesses who desire a high-quality building without having to pay the high cost of leasing a Class A building.

Sometimes, Class B buildings can be found in decent locations such as major commercial areas. However, you’ll often find a vast majority of Class B office spaces in the suburbs. Interestingly enough, a good number of Class B buildings were once classified as Class A, but due to age and deterioration, they have been downgraded to Class B.

Class B amenities can be just as good as their Class A counterparts though they tend to offer less benefits overall. With the right upgrades and renovations (along with an increase  in amenities), a Class B building can eventually be bumped up to a Class A.

When it comes to rent, Class B office spaces are considered to be average for their respective markets. As stated before, Class B buildings are excellent choices for businesses who want a quality building without paying the high rent costs of a Class A building.

Class C Office Space

As you’ve likely guessed, Class C buildings offer far less than Class A and Class B buildings. They’re usually much older than their nicer counterparts and don’t provide as many amenities. When it comes to location, they tend to be located in undesirable environments.

Class C properties may not be attractive to larger businesses, but they’re perfect for startups who are operating on a shoestring budget. Class C office spaces give smaller start-up businesses an opportunity to spend most of their money on more important areas of their business such as growth. In the meantime, they’ll still have a building to operate out of until they can afford something nicer.

Types of Office space

Classifications rely largely upon the quality of the building. However, office spaces can further be broken down into various types.

Traditional Office Space

This is your most common type of office space. Most people are familiar with traditional office spaces because  they’ve either worked in one or have seen it on television shows and movies.

All traditional office spaces usually have the same layout — cubicles, conference rooms, a reception area, private offices, break rooms, and a mailroom.

Creative Office Space

This is the type of office space that’s very open in design. You won’t find any cubicles in this type of environment, and there’s a chance you won’t find many private offices either. 

You’ll often find floors that aren’t carpeted, and the ceiling has an “open” design where the ductwork is exposed. Creative office spaces have all sorts of collaborative spaces such as group workstations and conference rooms.

It’s not entirely uncommon to find amenities to make employees as comfortable as possible. These includes game rooms, break rooms, a large kitchen, lounge areas and more.

The purpose of creative office spaces, as the name implies, is to help employees feel more creative as they go about their daily jobs. You can find creative office spaces in all three classifications of office buildings, and they’re popular amongst both small and large businesses. In fact, even major corporations have renovated entire floors of their Class A office buildings into creative office spaces.

Co-Working Space

With so many people turning to self-employment, co-working spaces are becoming more and more popular amongst freelancers and startups.

Essentially, co-working spaces house several entrepreneurs who rent a single small space for themselves. Co-working spaces often have open areas where tenants can gather together to interact and bounce ideas off one another. This is the perfect arrangement for those who don’t have a significant budget dedicated for monthly rent.

Co-working spaces come with a variety of benefits. For one they save the tenant thousands of dollars in rent. Some co-working spaces are flexible enough to offer week to week renting or even day to day. The most common arrangement is month to month in which the tenant can walk away at the end of the month if they so desire.

Co-working spaces are also all inclusive which means all expenses including utilities, common area maintenance (CAMS)  expenses and insurance  are covered. This gives tenants the freedom to operate without having to worry about the various expenses that normally come with operating a business out of a office space for rent.

Other office space types

Another type of office space that has yet to be mentioned are flex spaces. Flex spaces are ideal for those who require the entirety of their business, both the front end and the back end, under one roof. For example, a tenant will have their warehouse, accounting department, reception area and call center all in the same building.

Finally, there are executive suites which operate much the same as co-working spaces except they’re more professional. Office suites are ideal for remote sales teams and other smaller businesses who wish to benefit from a more professional setting while still keeping monthly rent relatively low.

Finding the right type of commercial space for your business

Understanding the various types of commercial property classifications and types of offices for rent will allow you to plan out which space is right for your business. If you’re looking for commercial space in the Albany, NY area, then look no further than Atrium Properties. We can help you find the perfect building for your business so that you can get up and running. Contact us today to get started.

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Ten Questions To Ask Before You Sign A Lease

Ten Questions To Ask Before You Sign A Lease

If there’s one thing you take away from this article it’s this — never take a lease for granted. The terms may seem friendly and accommodating up front, but even one misread sentence could lead to years of aggravation and headaches. Signing a lease can be one of the most significant contracts a small business owner ever signs. That means you should approach every lease with care. If not, you might end up regretting having signed that dotted line.

Let’s take a look at ten questions you should ask before you sign a lease.

1) How much is the rent?

When leasing office space, rent is just another part of doing business. But even looking for the cheapest rent that you can possibly find can be challenging.

Generally speaking, rent for commercial spaces is determined by the annual cost per square foot of the space. However, there are around five ways to calculate rent that all use square footage as a basis for comparison.

Gross leases

With a gross lease, the tenant is required to pay a flat monthly amount. Landlords are responsible for insurance, repairs, taxes, and any other expenses that come with operating out of the building.

Net leases

This is an agreement that requires tenants to pay for some or all of the taxes on a property, in addition to rent.

Net-Net leases

On top of paying taxes and rent, the tenant will also be responsible for paying insurance.

Net-Net-Net or Triple Tet leases

These types of leases are usually written for industrial properties. The tenant is not responsible for any of the costs associated with operating out of the building. This includes maintenance and repairs.

Percentage leases

This is a special type of rental where tenants pay a fixed rate plus a percentage of gross income. Percentage leases apply to retailers, with an emphasis on shopping centers and malls.

Can you sublease?

2) Can you sublease?

Let’s say you move into an office space for rent that’s ideally suited for your business. However, a few years into the lease you’ve grown to twice your size and your current facilities are no longer adequate. You can’t leave without breaking your lease, so what do you do? Simply put, you can find a tenant who meets the same standards that the landlord comes to expect from all of his or her other tenants.

Thus, subleasing occurs when the tenant rents to a subtenant. As mentioned before, the new tenant must meet the standards of the landlord. Therefore, you must vet the tenant to ensure they meet those standards.  Furthermore, if your subtenant decides not to pay, you’re still bound by the original lease to pay the rent.

Read the language of your lease carefully. Sometimes the new tenant will pay more than you did for the rent. The question of who gets the extra money might become an issue if you’re not careful. Be upfront with your subleasing privileges from the beginning to avoid issues like this.

3) Who else can move in?

It would be a real pain if a manufacturing plant moved directly next door to your law firm. It would be even worse if a competitor moved in. What would happen if your neighbor brought in the wrong type of crowd — the kind that scared away your customers.

Zoning laws may be more of a blessing than many of us realize. They protect businesses from moving next door to an incompatible neighbor. If you feel your landlord’s limits aren’t stringent enough regarding who can move in next door to you, then you can negotiate for stricter qualifications. However, this may come at a price. The stricter your limits, the harder it will be to find a new tenant if you decide to sublease.

4) What building service do you get?

Before signing a lease for a commercial space for rent, you should identify what services you’re entitled to. For example, every business needs electricity to operate. You also need running water for bathrooms. Let’s look at a couple of points you need to keep in mind:

  • The cleanliness of your business is essential for public perception. Therefore, you should request that cleaning services be included as part of the lease. Part of this negotiation should include the frequency at which the building is cleaned and whose responsible for the nuances of house-keeping, such as vacuuming, cleaning the bathrooms and taking out the trash.
  • In most cases electricity will be covered by the landlord. However, many landlords set reasonable limits on how much electricity you can use. If you exceed that limit, you may have to pay the difference.
  • Heating, ventilation, and air conditioning (HVAC) is also typically covered by the landlord. Regardless, you may still have to do a bit of negotiating

5) Can you renew?

When your lease has expired you have two options: move out or renew. Legally speaking, your landlord doesn’t have to offer you the same space once your lease has expired. That’s why it’s important to negotiate this part of the lease early. You should have a clause that guarantees that you have first rights when your lease has run its course. If not, you’ll have to pay the prevailing market rate to keep the space.

To renew their lease, a tenant typically has to give written notice. A tenant should submit this notice about one year before the expiration of the lease for long-term leases. Short-term leases are around three or four months.

If you don’t want to worry about letting your lease run out accidentally, you can set to renew automatically until you take measures to cancel that arrangement. Automatic renewals are especially beneficial to businesses with multiple branches where it can be challenging to keep track of all of the renewal dates of the separate locations.

6) Who’s responsible for insurance?

As leases are finalized, and tenants prepare to move in, insurance is often overlooked. As a result, the commercial property for rent  will likely be covered by a variety of insurance agencies that overlap one another.  Therefore, the price is more expensive than it has to be. Furthermore, the landlord will run into all sorts of trouble if catastrophe were to strike.

For example, let’s say a fire rips through the office space for lease. It may take several years for the various  insurance agencies to sort out who pays what or what’s covered vs. what isn’t covered.

Generally, landlords have a comprehensive policy on the building to cover liability for common areas such as elevators, stairways, lobbies, bathrooms, etc. They also provide casualty protection for the building itself.

With that being said, landlords are well within their rights to insist that the tenant maintain their own insurance to provide protection from being sued by a customer who may injure themselves due to the conduct of the business.

7) How long will the lease run?

Generally speaking, commercial leases can run anywhere from 3 to 10 years, and you can negotiate the terms with the landlord. Not only should you determine when the lease should begin but also when it ends. Last minute problems tend to pop up if you haven’t verified if the property is ready for you to move in yet.

For example, construction on the building may be taking longer than intended, or you may disagree with the landlord about making your own renovations. You may even run into a situation where the old tenant refuses to move out!

With that being said, your lease should tell you what will happen if your rental space isn’t ready to be occupied by the move in date. It should also spell out how the landlord will accommodate your inconvenience. Be careful about moving out of your old premises too early. If you happen to move out of your old space and your new office space isn’t ready for you to move in yet, you might end up in a situation where you have to operate out of your van until you can figure things out.

8) How much will the rent go up?

Today, costs can be wildly unpredictable; so much so that many landlords insert escalation clauses in their leases to protect themselves. There are many common types of escalation clauses. One type of escalation clause passes on prorated increases in taxes, maintenance, heat, and other direct costs. Other clauses build in regular step-ups in rent over the life of the lease while others raise rent according to the Consumer Price Index.

9) Who pays for improvements

Most modern-day office buildings allow for renovations to be made such as lighting, carpeting, paint, and so on. However, these types of improvements are contingent on what the tenant feels they need to improveand what the landlord will allow. Frankly, improvements are often the most negotiated aspect of any lease. Many tenants and landlords have battled over the issue of improvements to a leased property.

The point of contention typically revolves around the high cost of improvements. For example, even minor renovations such as installing a single new electrical outlet can cost as much as $100 to install.. The cost would be much higher if every outlet in the building needed to be replaced.

Heavy duty carpeting can be even more costly, running as much as $20 per yard. That certainly adds up if you’re trying to carpet an entire building. If you’re looking to hire carpenters, painters, or any other tradesmen they can charge as much as $15 – $30 an hour for their services. Overall, the costs add up quickly.

The best way to convince a landlord to foot the bill for significant improvements to the property is to convince them the renovations will attract future clients even after your lease has run its course. Expect strange requests, such as an unusual paint color and carpeting with weird patterns to be rejected. Such renovations add no value to the property, but this, of course, is dependent on what the landlord allows.

All agreements pertaining to improvements should be put down in writing. Ideally, you should also include an estimate of costs from a contractor and detail floor plans before signing the lease. This document is called a “work letter,” and it also states who owns the improvements made to the property.

For example, improvements such as shelves, office desks, cabinets and the like will typically belong to the landlord regardless of who pays for it. That’s why specifying who owns the improvements is very important.

10) What happens if your landlord goes broke?

This is a worst-case scenario, but it certainly happens from time to time. Let’s say you’ve spent thousands of dollars on renovations to a new office space. All is well for the first few months, but suddenly a representative from the bank shows up and tells you that your five-year lease is void because the bank has foreclosed on the building. They give you the option of staying, but atthree times your original rent. Otherwise, you have thirty days to move out.

This kind of stuff happens, so you need to protect yourself the best way you can. You can avoid such a situation with a standard “recognition” or non-disturbance clause. This ensures that the rental agreement between the tenant and the landlord will continue under any circumstances. Non-disturbance clauses were created to protect the client on the chance that the landlord goes bankrupt.

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How to Lease Commercial Real Estate

How to Lease Commercial Real Estate

As a business, you should know the ins and outs in order to lease commercial real estate. Knowing how to negotiate effectively with a landlord will help you avoid getting ripped off and will also aid you during the negotiation process.

There are three forms of commercial leases:

  • Full-service leases
  • Net leases
  • Modified gross leases

In this article, we’ll be breaking down the steps of finding, negotiating, and signing a commercial lease as you search for commercial space for rent.

1) Setting your property parameters

Before you start signing contracts, you should have a general idea of your ideal property parameters. There is a massive range of commercial property for rent out there, thus setting predefined parameters will help you significantly limit your search.

You should have an idea of your ideal building size, ideal customer, accessibility, budget, and property type/zoning. Setting and understanding these parameters will ensure you find commercial real estate that’s perfect for your needs.

Now we’ll exam each of these parameters in-depth to gain a better understanding of each.

Ideal Customer

No matter what type of business you’re running, one of the most important parameters you should focus on is your ideal customer. Examples of businesses that fall into this category are restaurants and retail stores. Identifying where your ideal customers congregate will help you pick the perfect location to set up shop. 

Let’s say you run a tire business. Setting up along a major road will put you in the optimal position to become more visible to drivers who are in need of a tire change.

When it comes to office leasing, you should search for a location that’s more suitable for your employees. How easy is the location to find? Is there accessible parking? Etc.

Property type/Zoning

When you’re on the hunt for office space for rent be mindful of zoning laws. All commercial real estate has been zoned for a specific use. For example, certain commercial buildings have been zoned for retail stores while others have been zoned for use by restaurants.

Therefore, if you’re attempting to open a warehouse, you won’t be able to lease a commercial space zoned for a grocery store. It would behoove you to know the type of zoning your business needs. Conduct thorough research on your local zoning laws to stay ahead of the curve.

Size

Buildings come in all shapes, sizes, and layouts. The best way to go about determining the size of your desired office space for lease is to calculate either the total number of people you plan to employ or the maximum number of customers that you can accommodate at any given time. 

Max Budget

Always be aware of your maximum budget. Recognizing your limitations will allow you to avoid wasting your time searching for offices for rent that don’t fall within your budget. Typically, your maximum budget is determined by the size of your business as well as its performance.

Accessibility

Easy accessibility is essential for every business. Let’s say you run a restaurant. Do you have adequate seating for your customers? Do you have sufficient parking? Do you have a ramp for disabled individuals? Are you located in an area with ample vehicle and foot traffic? Answering these questions will give you a general idea of how truly accessible your commercial space is.

The various types of commercial leases

2) The various types of commercial leases

There are three types of commercial leases you should familiarize yourself with:

  • Full-service lease
  • Net lease
  • Modified gross lease
Full-service lease

When it comes offices for lease, the most common type of commercial lease is a full-service lease. With a full-service lease, the rent is all-inclusive. This means the landlord takes care of all property related expenses. Such expenses include insurance, repairs, utilities, janitorial services, and property taxes.

Full-service leases are easily the best deal for the tenant because all costs are upfront. Therefore the tenant can forecast monthly expenses without the fear of hidden fees upsetting their budget.

Net lease

With a net lease agreement, the tenant pays a lower annual rent when compared with a full-service lease. As a result, the landlord can also charge what are considered to be “usual costs.” These include common area maintenance items (CAMS), property insurance, and property taxes.

There are three types of net leases: single, double, or triple net lease.

With a single net lease, the tenant pays a pro-rata share of the building’s property taxes on top of the rent. With a double net lease, the tenant must add on property insurance in addition to the property taxes and rent. With a triple net lease, the most landlord-friendly lease, the tenant must pay property insurance, property taxes, and CAMS.

The primary advantage of a net lease is the fact that the rent is cheaper overall. However, the tenant takes on the responsibility of covering the maintenance fees of the property. In most cases, these fees will be added to the rent on a monthly basis.

Modified gross lease

If you’re not interested in either a full-service lease or a net lease, you can meet in the middle with a modified gross lease.  With a modified gross lease, tenants pay for CAMS, property insurance and property taxes. What makes the modified gross lease so unique is these expenses are paid along with the rent in one lump sum. 

The primary advantage of a modified gross lease is that the price is fixed and you won’t have to contend with any hidden fees. Even if certain expenses increase (such as CAMS or insurance), your rent will always remain the same. Also, when you sign a modified gross lease, the landlord covers the janitorial and utility costs.

3) Find the right type of commercial property

 There are a variety of factors you need to keep in mind when you’re searching for the right type of commercial property.

Anchor tenants  – sometimes commercial properties that have multiple units will have an anchor tenant. The perfect example of an anchor tenant would be a dental office located within a shopping complex. Find out about any possible anchor tenants before signing a lease, because the landlord might be able to back out from the other leases associated with the property if the anchor tenant leaves.

Location – ensure you’re in a commercial space that either accommodates your employees or your customers.

History of the landlord – knowing the history of your landlord will give you an idea of what to expect during your interactions with one another. Often times commercial space lease agreements span multiple years, so it’s best to know as much about the landlord as possible.

Amenities and services – what type of amenities and services does the commercial space offer? Examples include utilities, dining options, Wi-Fi, loading bays, outdoor space, etc.

Doing a walkthrough of the commercial space

When you’re searching for a commercial space, you should always look for multiple locations. That way, you’ll have more options when you enter the negotiation phase. On average, you should identify at least 4 -10 commercial spaces. This will give you a ratio of the average price that you should come to expect of the commercial real estate in a specific area.

A great idea is to identify around 8 – 10 commercial spaces that fit your criteria and then limit that number down to 4 -5 picks. Once you’ve done that you should do a physical walkthrough of those locations to narrow your choices even further.

In the commercial real estate business, physical tours of a property are customarily referred to as “technical property reviews.” It’s highly recommended that you walk the property with an experienced contractor because the property may need what’s known as a lease buildout –improvements and additions that are required to be added to the commercial space.

Lease buildouts can be essential to the negotiation process because you may be able to get the landlord to either fully or partially cover the expense of any repairs or additions. It all comes down to negotiating the lease buildout into your lease once you’ve entered the negotiation phase.

Of course, that leads us into one of the most critical aspects of this guide — negotiating the terms of your commercial lease.

4) Negotiate the terms of your commercial lease

When you have located the commercial space that fits your criteria, it’s now time to move on to the negotiation phase. Formally, you should request the terms of the lease in writing. This information will be communicated to the broker of the landlord.

Next will come your business letter of intent (LOI) which states your offer or counteroffer. You can use your LOI to communicate to the landlord why you’re the best choice for a particular piece of property. You should make your LOI as convincing as possible because it’ll make you more attractive to the landlord, especially when you’re competing for a commercial property that’s especially competitive.

This is what your letter of intent should include:

  • The number of years you’ve been in business
  • A statement with your intent to lease
  • The terms you wish to propose
  • A list of your products and services
  • Your pricing
  • A description of your business
Common commercial lease terms you’ll encounter

We’ve discussed the various types of leases, but no matter what lease you end up signing, you’ll run into a number of similar terms. Let’s take a look at a few of the more common terms:

  • Rent abatement – the tenant will either not have to pay rent or pay a reduced price if there is any damage to the commercial property until the damage has been fixed.
  • Length of lease – on average a commercial lease can range anywhere from 3 to 10 years. Businesses will often find shorter leases are advantageous because it lessens future financial burdens which allows for great flexibility.
  • Capital expenditures – this term makes reference to the party who’s responsible for specific expenses such as maintenance and repairs amongst other costs associated with the building.
  • Lease build-out credits – a representation of the tenant’s ability to conduct leasehold improvements in their rental property which will then be charged to the landlord. The only improvements that fall under this category are the ones that are required for the business to operate successfully. To cover the cost, the landlord will either pay out of pocket, reduce the rent, or reimburse the tenant.
  • Deposit – the vast majority of leases require a deposit. Deposits are typically fully refundable and serve to protect the landlord from a tenant who does not pay their rent or from those who cause significant damage to the commercial space.
  • Termination clause – this is a clause in the lease that allows either the tenant or the landlord to terminate the lease under specific conditions. Termination clauses are both good and bad because they allow the tenant to terminate a lease when needed, but the landlord can easily do the same.
  • Use clause – this is a clause that defines the type of business that can use a particular commercial space. For example, you can only open a restaurant in a space that has been zoned for restaurants.

There are many terms for commercial leases. Do your homework and know what terms are available to you so that you can identify all of your options.  

What it all comes down to

When it comes to leasing a commercial space, there are a great many factors you have to keep in mind. Ultimately, commercial leases can work to your advantage if you know what factors to look for. Do your homework. The more prepared you are, the more likely you’ll end up with a good deal that will benefit your business for the long-term.

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