Unlike a residential lease, there really is no such thing as a "standard" commercial lease: each business lease differs extensively, and must be prepared carefully.
What Makes a Good Commercial Lease?
At least 10 clauses comprise the average business lease in Florida. These clauses thoroughly cover every aspect of the commercial property for rent, including:
- Premises Clause - exactly what property is to be leased, whether a specific office or entire city block,
- The Use Clause and Exclusive Clause - how the property will be used, including which products, or type of business will be operated. If part of a plaza or building with more than one unit, exclusivity for one product or type of business may be granted.
- Improvements and Alterations Clause - often, an empty unit is all that is rented. This clause governs the improvement of the space, including the installation of equipment, plumbing, electrical, or other additions.
A smooth business relationship between landlord and tenant is dependent on getting these clauses, and all the remaining clauses that govern a commercial lease, written in a way that is fair and equitable to both parties.
Performing Due Diligence
Both landlords and tenants would be wise to perform due diligence before entering into a legally-binding commercial lease agreement. Here are just a couple of blunders either party can avoid by doing their homework:
Tenants sometimes rush the process of looking for a commercial space for their business. The general rule of thumb: for space under 10,000 square feet, tenants should begin the search six months out. Any less, and a tenant has fewer choices as the business launch date approaches, possibly resulting in higher rent, or less-than-ideal lease terms.
Landlords often fail to determine if their prospective tenant can afford the lease in question. By performing a background check of the tenant, including credit worthiness and a review of the tenant's personal assets, a landlord can avoid the costly matter of evicting a non-paying tenant.
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Don't Forget to Negotiate
Sometimes, both parties in a commercial lease transaction fail to realize the leverage they have, and so they fail to obtain the best deal for themselves - a mistake that negatively impacts profitability.
The tenant is about the give money every month to the landlord: this happy occurrence in the landlords' life can surely be leveraged by the tenant to obtain favorable lease terms in some way.
Conversely, the landlord has the perfect space for the tenant's business, and incredibly, it's available. An astute landlord will be able to leverage this opportunity for the tenant, and negotiate aspects of the Lease Agreement in his or her favor.
Before the Lease is Signed
Tenants and landlords alike may wish to meet with a real estate lawyer before a commercial lease agreement is signed. When doing so, it's best to gather the following documents and bring them with you, if available:
- The Lease Agreement
- Any zoning info known about the address
- Tenant business plan or summary
Also, it may be helpful to bring any pertinent communiqué between landlord and tenant thus far.