Renting a commercial space for your business can be an exciting step forward, especially if you are in love with the location. It is easy to get carried away with the idea of your business’s future in that space.
However, it is important to be level-headed when considering the terms of your commercial lease. An unfavorable lease agreement could be more of a burden than a benefit to your business.
The type of lease matters
Although most residential leases have comparable terms, the same cannot be said for commercial leases. Because commercial leases can be very different from one another, it is important that you make sure you fully understand the terms of your lease before signing it.
Depending on the type of lease, you could be responsible for a variety of expenses other than rent. These expenses could include taxes, insurance, maintenance or other fees.
Common area maintenance fees can be confusing
One fee that some business owners may initially overlook is the common area maintenance fees, also called CAM fees. It may be advantageous to make sure that your fee is based on the percentage of the overall building that you are renting, not how much of the building is rented out. This will keep your payments more consistent and predictable.
You may also want to verify what your CAM fees are going toward. You do not want to contribute to expenses your landlord should be responsible for, such as the cost of marketing rental spaces or negotiating leases with other tenants.
Insurance requirements can vary
It may also be advantageous to clarify several details about the insurance coverage the lease may require. Many commercial leases require the tenant to acquire commercial general liability insurance, which may provide your landlord more protection than it provides you. However, it can be prudent to verify the type of insurance that your lease requires, as well as when that coverage must be in place, so there are no surprises.
Although you may be eager to get your commercial lease signed, it is important to take your time and review the terms thoroughly. Financial surprises or hidden fees can impact the success your business may experience in your new location.