More workers are returning to the office, with the workforce creeping back to normalcy after the pandemic pause. Additionally, businesses that boomed during the past few years are hunting for new office space or locations to accommodate the rise in sales.
Landlords looking to keep up with inflation and profit off the changing economy are driving rent prices higher than the national average in places like Orlando, Florida. For example, a 2021 report from the National Association of Realtors indicates that rents for office space increased 2.3% year-over-year in Orlando, compared to the national average of 0.1%.
With this return to the brick-and-mortar office, more new and old companies are looking to enter commercial lease agreements. But you may have questions about how to negotiate a commercial lease in today’s changing economy. After all, you want to protect your investment and set your business up for long-term growth. A key location with great rental terms can help you do just that.
In this post, the BrewerLong team explores common questions to ask before signing a commercial lease. Keep in mind that this post serves as a general guide, but it isn’t gospel. The best way to understand whether a commercial lease is right for your business is to talk to a business lawyer.
We work with businesses of all sizes to help them on the journey of being an entrepreneur. We have helped hundreds of companies write, negotiate, execute, and enforce commercial lease agreements.
What Is the Term of the Lease?
The lease term length is the first item you’ll want to check. Commercial leases vary in length, especially as compared to residential leases. While a lease for an apartment may be one to two years, commercial rental contracts are typically much longer, likely at least five to ten years.
It’s essential to do a long-term cost analysis to determine what you’ll be paying under the lease and for how long. Since you will most likely sign up for a long-term commitment, doing this research ahead of time can save you time and money. You need to decide if it makes good business sense to sign a lease for a term of that length. It may be that the proposed lease term at the price point in the agreement won’t be a good fit.
Is Commercial Parking Included in the Lease?
Along with parking for you and your staff, your commercial real estate needs access to customer parking. After all, getting a good deal on a commercial lease is no good to anyone if customers can’t get to your building.
Check the lease terms to see if the location includes on-site or proximate parking and how many spaces are available. Your commercial lease agreement needs to not only accommodate your present parking needs but allow for potential future growth. Thinking about this now can save you the hassle down the road. A BrewerLong business attorney can help you negotiate for your fair rights.
How Much Is Rent, and Are Rental Increases Baked Into the Contract?
The rental price and how much rent will increase each year are incredibly important. Unlike most residential leases, which typically have a stable monthly rental cost, commercial real estate contracts may have a built-in price increase per year.
Before signing a commercial lease, make sure you understand—and agree to—how much rent is due and by how much rent may increase each year.
Can I Make Modifications to the Space?
In terms of how a space will function for a tenant, a necessary commercial lease provision concerns the modifications a tenant can make to the area. Not every location is ready-made and perfectly set up for your needs, so having the ability to modify and renovate the space is indispensable. Our lawyers are available to assist tenants with their commercial lease concerns.
What Is the Procedure for Getting Out of the Lease?
Knowing the consequences of getting out of a commercial lease before the term ends is also essential before you sign. Likewise, you want to understand how much prior notice the landlord requires before tenants get out of the lease.
In reviewing this term, it’s about striking a balance between the landlord requiring enough time to find another tenant with your interest in being able to move on if the lease isn’t suiting you well down the road.
BrewerLong—Experienced Business Attorneys Serving Florida
Negotiating a commercial lease is best done with someone experienced in the area, and we’re well-equipped to provide it. For over 14 years, we’ve negotiated numerous commercial leases for businesses of different sizes and in various sectors. We strive to achieve an effective yet efficient solution to our business clients’ needs. Further, since 2012 on through the present, Trevor Brewer has earned the AV Rating from Martindale-Hubbard.
If you have questions about how to negotiate a commercial lease, contact our office today to schedule your consultation.