13 Fears About Your Lease & A Better Way to Conquer Them
Renting commercial property is a major move. The good news is that you can avoid many common worries in the first place, when you do a line-by-line review of the lease. Sure, reading a commercial lease can be difficult and time-consuming, but the consequences of not reading it can be infinitely more unpleasant. If worry and fear are keeping you up all night, here are 13 common doubts and how you can resolve them during the lease negotiation process:
- Signing the wrong type of lease. If you hear the term “standard business lease” you should know there isn’t such a thing. Many landlords and even some inexperienced attorneys will tell you otherwise, but always know leases are negotiable clause by clause.
- Signing a long-term lease without reasonable upgrades. It’s no surprise that most landlords prefer that commercial tenants sign long-term (think 5 to 10 year long leases). It might be surprising, however, to know that you are able to ask for certain items in relation to the length of the lease, such as free rent for a period of time and/or an upgrade at the landlord’s expense.
- Not getting an “out” clause built into the lease. Depending on term and several other factors, it is not always likely that you will be able to get a right to terminate. However, at the very least, you need to make sure you have an “option to sublease” and an “option to sell the business and assign.” Having a tenant rep by your side can help you determine what are reasonable requests.
- Not speaking your mind. Ultimately it’s your business. Don’t be afraid to speak up if you feel you aren’t being heard.
- Not having the right help for your business. Choose a real estate broker or advisor who’s very experienced in commercial lease negotiations. Also, check references with other business owners for specific feedback around lease negotiations.
- Rejecting a good offer out of emotion. Lease negotiation is a two-way street. Hear something you don’t like? Stay calm, and take a deep breath before reacting. You should never reject a deal out of anger.
- Relying on the landlord’s word on what is (or isn’t) permitted. Get permission from the city or township zoning officer before entering lease negotiations. Your landlord may really believe what he tells you, but he’s not the one who makes that decision.
- Negotiating in “panic mode.” It’s so important to keep a level head whenever you’re negotiating. You have to keep an open mind and know that there are always creative options for any circumstance you’re in.
- Failing to “get it in writing”. Always get everything discussed away from the negotiation table in writing. Find a way to document in-person conversations with the landlord. Never agree to anything unless it’s written down.
- Not getting feedback or input from your employees on your space. It’s important that your team gets to offer up their feedback. After all, they’re the ones who have to spend 40 hours a week there. Take surveys from your staff and learn what’s valuable to them as well as your business.
- You won’t get the perfect space. Being attached to any one property puts you at a major disadvantage. Don’t get stuck on the idea that one space will determine the success of your business. Bottom line: You want to be where your clients are – make sure the location is convenient over sexy.
- Not securing financial documents. Securing all bank statements and financial documents well ahead of time, before the lease negotiations, will help you out tremendously. You’ll know your budget and have that figure in your back pocket for any leverage, if it’s needed. Schedule time with your accountant, your loan officer, etc. to help get these documents in order.
- Trying to do everything on your own. Not getting professional help will put you at a major disadvantage. Seek the help of a trusted advisor in your area, who is experienced at lease negotiations, and who has the interests of your business at heart.
If any – or all – of these fears sound familiar, don’t fret. When you do your research and have the best support from a trusted advisor, you’ll be successful in getting the lease that’s right for you and your business.