Posted 09-01-2008 4:10 pm by
As a small business owner, obtaining a good lease can be just as important as picking the right location for your business. Here are some tips to negotiate a good lease…
1. Many landlords care more about having a good tenant than charging as much as possible for rent. If your business has good credit rating and strong financials, it is to your advantage to show them to your landlord so you can convince them why they should rent to you at a lower rate. There are many vacancies in today’s market, which means more flexibility on the landlord’s part and more power to the tenants.
2. Understand who pays for the property expenses. Some landlords expect the tenant to pay for all property expenses (known as a NNN lease), and some landlords pay for all the expenses (known as a gross lease). Some landlords will pay for part of the property expenses and expect the tenant to pay the rest. When comparing lease rates, don’t simply look at the dollar amount and say, “Wow! This place is $17 per square foot per year.” If it is a NNN lease, the tenant may pay $2 to $4 per square foot extra as additional rent because the landlord bills the tenant for all property expenses.
3. Carefully read the lease. The commercial lease is usually a long document filled with small fonts. Do not sign it blindly without understanding what you are signing! Depending on where you are leasing, you may be restricted from selling certain products or services. You may be required to stay open for business according to hours your landlord wants, even if it doesn’t make sense for you financially to stay open during certain times. You may be required to pay additional rent if your sales exceed a certain amount. Make sure you understand the lease before you sign it.
Having a good lease is important to the long-term financial health of your company. Having a good commercial agent on your side can help you understand the terms of the lease and negotiate the best possible lease for you. The leasing commission is typically paid by the landlord, so finding a good commercial agent to represent you as the tenant won’t cost you a cent. Remember, the lease is negotiable, and your negotiating power increases as the size of your company grows.
---Written by Oliver Wu
Oliver Wu | Advantage Commercial Brokers
The Commercial Broker for
Small Business Owners in Puget Sound
Direct: (425) 785-6608
Fax: (425) 882-2547
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