When you want to lease business property, the process can be tricky. Choosing the right location, securing that location and getting the right lease agreement are all important parts of the process. A mistake in any one of these areas could set your business back both in progress and financially. Therefore, when selecting business property, it’s important to avoid these five mistakes.
Mistake #1: Looking at Only One Place
When you are car shopping you often get quotes from different dealerships. You can do the same thing for your business property. Getting a “Request for Proposal” is a great way to create competition. Put down all the things you want from the property and start asking for bids. The more competition you create the better the offers will be. There is no flexibility from the owner when they are your only option.
Mistake #2: Overlooking Important Information in the Lease
This might seem like a no-brainer, but there are a lot of businesses who don’t notice rent increase clauses in the lease. One of them is a CPI (customer price index) clause. What this means is that as your business grows, the property owner has the right to increase the rent on you. While there may be no way to avoid this altogether, you can work it out so that they hold off increasing it until the business is stable and healthy. Ask for a two to three year rent control.
Mistake #3: Forgetting About Lease Incentives
Many business owners get enamored with the space and forget to use their leasing as bargaining power. Asking the property owner about leasing incentives is a great way to get free rent or reduced rent for a certain period. Often times, the property owner has previously listed or advertised incentives. Hold them to those promises.
Mistake #4: Ignoring Room for Improvements
No matter what the property is, one of the biggest conflicts between the tenant and the property owner is over improvements to the property. When you sign a lease, make sure the lease language is very clear on the amount of improvements you can and can’t make. The best idea is to have language in place that allows you to make improvements cosmetically and up to a certain dollar amount without the property owner’s approval.
Mistake #5: Relocation Ruckus
If you rent in an office building, your property owner may have to move you at some point. However, just because they may have to move you to another part of the building doesn’t mean you should be punished for it. Many renters make the mistake of not getting the cost of the move covered, or not ensuring that the place they move to is the same size or the same quality. Make sure your lease agreement promises you fair and financially acceptable relocation.
