Your Complete Guide to Leasing Commercial Property
There are plenty of things set to blindside you in business. There’s no reason to add your commercial property lease to that pile.
Canada hit a record $43.1 billion in commercial property investment in 2017, which shows how attractive Canada has become to businesses. If you’re a newcomer on the scene or a small business looking to expand, you need to know how to make the most of the commercial rental market.
That’s why we’ve put together this complete guide to leasing commercial property for rent.
Know Your Purpose
It’s critical you understand your needs before you even start shopping around.
When you create a solid idea of your ideal property, you’re reducing the chance you’ll end up signing a lease for something unsuitable. In business, making a mistake when leasing a commercial property could be crippling and could end up draining your bank account.
Knowing your purpose also puts you in a strong position for negotiation. If you know exactly what you’re looking for, and you have researched the local market, you’ll be ready to get stubborn when the situation calls for it.
Select a Location
It’s a truism that location is everything.
This goes both ways when finding a commercial property for lease. Your ideal business location may prove prohibitively expensive. But with sensible planning, you can select your ideal location and find the right balance between expense and functionality.
It’s worth setting time aside for research of the local area. Getting a sense of through-traffic and nearby businesses can help you find the ideal area for your business. Of course, talking with your commercial real estate agent can aid you in coming up with a list of your requirements.
Decide on the “Must Haves”
Commercial property is a strange beast because facilities can vary widely by location and type of property.
Parking is often one of the bigger considerations facing a business looking for commercial space. Parking not only affects staff but also your customers, especially if you’re a retail business. Failing to account for parking could dent your visitor numbers and cause potential employees to take work elsewhere.
Another major consideration for commercial properties lies in the legislation to which businesses must adhere.
Fire codes and health and safety demands vary by industry. While a property might be up to code, it may not be suitable for businesses purposes. If you lease a property for the hospitality industry, for instance, you have a greater duty of care than the building might support.
Disabled access is another key consideration not just for customers, but for employees as well. Advocacy continues to grow for disabled access legislation, but disabled access can often put strong demands on a business property. Some older properties may not be fit for conversion to allow disabled access at all.
Like any industry, a commercial property comes with its share of jargon.
Understanding common commercial property terms will ensure you find what you’re looking for — and know what you’re signing up for. Going in with knowledge of terminology will also put you in a stronger position for negotiating a favourable lease.
As in any industry, showing a lack of knowledge may leave you prone to predatory practices. You don’t have to be an expert, but you need to prepare yourself with a basic understanding.
Research the difference between standard lease types, such as gross, modified, and net leases, along with any other contractual points of negotiation, such as turnkey buildouts.
An even better idea is to contact the professionals. Real Estate Agents who deal with commercial property day in and day out will be a strong ally when you go to rent a commercial property.
It’s important to know what responsibilities you’re taking on when leasing a commercial space. Anything you’re responsible for will likely come out of your business budget.
For instance, you may be responsible for common areas shared with other units. The exact split of services and utilities (and the associated costs) will also vary from building to building and may form part of the terms you negotiate with your landlord.
Decide on Subletting
The world of business isn’t always predictable. A single unrenewed contract could force a business to move to smaller premises. Likewise, sudden growth could see you outgrow a leased property.
In these situations, there are two options. An escape clause in your contract could allow you to hand the property back. If not, your best option is likely to be subletting to another business.
You’ll have to ensure subletting provisions appear in your contract, however. Not all commercial properties will include such provisions.
Negotiate Your Contract
One key aspect in which commercial renting differs from residential lies in the scope for negotiation.
Many commercial property owners are prepared to negotiate terms to find the most suitable tenant for their building. In the course of your negotiations, you could discuss special terms like an escape clause, but you’ll also establish the groundwork like the length of the lease, triple net, and the responsibilities of both parties.
It’s also customary at this point to request the landlord stop advertising the property you’re negotiating. Landlords will usually accept this on good faith, which will stop any other parties signing anything before you can conclude negotiation.
Finalize the Agreement
We’ve already touched on what a costly mistake it can be for a company to sign a lease that isn’t in their business interests.
It’s vital that you read and re-read your contract before you sign it. Your lawyer should read over the legalese to ensure it’s all in order. Once you’re finally ready, it’s time to sign.
Once you’ve signed the lease, the property is yours. But you need to ensure you’re keeping within the terms of your contract if you want to avoid going through the costly process again in the near future.
Securing Commercial Property for Rent
This guide should give you a good idea of what you need to secure commercial property for rent. Skipping any of these steps could have a dramatic impact on the fortunes of your business, so it’s worth taking the time to get it right.
Ready to begin your commercial property search? You can start today.
I am proud to help clients achieve their real estate goals and am proud to be a member of the hard-working team at CENTURY 21 Poirier Real Estate
Kim became a real estate agent after being approached by a friend with the opportunity. Little did he know that this would become his lifelong career passion. Since that fateful day, Kim has been helping his clients achieve their real estate goals and has been proud to be a member of the hard-working team at CENTURY 21 Poirier Real Estate.
- October 1, 2018