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8 Things To Consider Before Signing a Commercial Lease

May 23, 2019 | Small Business Loans
 8 Things To Consider Before Signing a Commercial Lease

For business owners, rent is likely one of your biggest expenses. If you’re about to sign your first commercial lease or plan on moving to another leased space soon — make sure you’re considering these 8 important factors before signing a commercial lease agreement, says Rich Kraus, a senior business advisor at leading lender and nonprofit CDC Small Business Finance.

1) Who will be your future neighbors?

 8 Things To Consider Before Signing a Commercial Lease

Rich Kraus

Chances are, the commercial space you’re considering is in some type of center. In other words, you’ll have neighbors that can directly or indirectly impact the success of your business. Pause and ask yourself:  

2) What’s around the commercial space?

 8 Things To Consider Before Signing a Commercial Lease

Every commercial center has its own flow, personality and quirks. Early on in your research, you’ll want to familiarize yourself with these qualities. Before signing a commercial lease, also consider these questions:

3) How responsive is the landlord?

 8 Things To Consider Before Signing a Commercial LeaseCommercial leases are often multi-year agreements, averaging about five years, depending on the location and market conditions. This means it’s monumentally importantly that you and your future landlord are a good match. Before making the long-term lease commitment, ask yourself:

4) What are the center’s common rules?

At some point in your research, you’ll likely encounter the term CC&Rs. They stand for Covenants, Conditions and Restrictions. They’re basically a set of rules set by the landlord for the tenants to follow. Make you consider these questions before signing a commercial lease:

4) Do you know what these mean: CAMs and NNNs?

 8 Things To Consider Before Signing a Commercial LeaseIf you’ll be renting space at a commercial center, also get familiar with common area maintenance fees, also known as CAMs. These fees are charged to the tenant and usually cover repairs and the maintenance of the property.

Another common acronym you’ll see is NNN. This stands for triple net lease, an agreement that requires the tenant to pay the net amount for three types of costs. These costs include: net real estate taxes on the leased property, net building insurance, and net common area maintenance.

Keep these questions in mind before you sign your rental agreement:  

5) Have you read the commercial lease?

 8 Things To Consider Before Signing a Commercial LeaseJust because a landlord is asking for a certain lease price doesn’t mean it’s always reasonable. Protect yourself by getting comparables, or comps, from your leasing broker to make sure you’re paying a fair price.

Aside from asking about monthly rent, also dig deep into these factors:

And the list goes on. Make sure you are working with a team of professionals who can help you during the leasing process, from the leasing broker to your accountant.

Related: The best way to protect yourself before starting lease buildout

6) What about the inside of the space?
 8 Things To Consider Before Signing a Commercial Lease

7) Have you taken these next steps yet?

8) What are the big takeaways?

Are you looking for a business loan to finance tenant improvements or anything related to a future commercial lease? CDC Small Business Finance offers several loan options for business owners in this situation.

Tell our loan experts about your business, and they’ll work to match you with a financing plan that best suits you. Let’s talk! Reach us at loaninfo@cdcloans.com or (619) 243-8667.

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