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Questions to ask when you’re contemplating your first commercial lease

On Behalf of | Feb 25, 2020 | News |

Commercial real estate leases are vastly more complicated than residential ones — and you have far less protection than ordinary consumers. In general, the law presumes that people who are engaged in business transactions are savvy enough to protect themselves.

So, make sure that you understand a few basic terms going into negotiations for your first commercial lease. Here are some of the top things you need to know about a potential lease:

  1. What is the common area maintenance (CAM) fee? The CAM pays for things like landscaping and the maintenance of any lobbies or other shared areas. How it is calculated can drastically add to your costs.
  2. Do you have the right of first refusal? If more space becomes available in the building, do you get the right to consider adding that to your space before it becomes publicly available?
  3. Can you sublease? This could be important if your business doesn’t thrive in that location or you need to move to a bigger location.
  4. What is the rentable square footage? This allows you to compare the projected cost, foot for foot, compared to other rental properties available in the area.
  5. What is the usable square footage? This is what you can actually use because it doesn’t include stairwells, hallways, lobbies and bathrooms, so that can better inform your decision when you’re trying to see if a space is right for your needs.
  6. How does the escalation clause work? You can generally expect rents to increase over time, but you need to know what goes into that figure. The escalation clause can tell you what to expect.

Commercial real estate leases can be difficult to negotiate if you aren’t sure where there’s room to “give” and where there isn’t. Find out how an experienced advocate can save you time and money.