For Investors

Attributes of a Successful Commercial Lease

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  1. Your business is thriving and the monthly lease expense is manageable. It feels appropriate to your sales volume and profit. Your location is in no way hindering your success. Ownership put all of their promises in writing without any duress. Profit per square foot is acceptable.
  2. The term and expiration of your lease is in alignment with your trade cycle. Should you need to relocate; the lease expiration will not come at the peak of your annual or multiyear trade cycle.
  3. You executed your lease with minimum duress. Your location represents the best combination of site attributes that was available at the time. Your compromises were minimal. You knew the market and this choice was optimal.
  4. Prior to signing your lease, you or your agent canvassed the building and immediate area and confirmed that the other tenants have no major complaints that were hidden during your negotiations. You confirmed that the building was not for sale and that there were no major deficits in the structure or its associated capital equipment.
  5. You were always treated like a customer by ownership and their agents. You should always think twice about entering into a lease where ownership is not treating you like you treat your customers. Building owners’ number one negotiating tactic is to make you believe that they like you until the lease is signed. Behavior and tone is more important than words. Pay attention!
  6. Prior to and during your move-in, ownership and the building management have taken all reasonable steps to ensure that the process was as smooth as possible. Moving is painful by definition. As a new customer (tenant), responsible ownerships should help with move ins, if needed.
  7. You have not discovered any hidden defects such as noise, odors or inadequate power so that running your business not only becomes unpleasant at best or impossible at worst. You also did not take on any capital asset responsibilities that rightly reside with ownership. This is very common for the inexperienced.
  8. If you used a commercial real estate agent, you should feel that he or she earned their commission through their service to you. All a good agent has is time, expertise and market information. This is gold if you are trying to run your business.
  9. Your real estate attorney was able to review and secure appropriate language that maintained your business integrity while maintaining fair balance in the tenant/ownership relationship. Do not enter into any commercial lease without the guidance of a competent and experienced real estate attorney. Preferably a trial attorney who knows how the courts work. They tend to create the best contracts.
  10. Six months into the term of your new lease you have few, if any, regrets about your lease and its terms. If you do, try to make sure that you remember them and get them settled at renewal, if you choose to stay. Make sure that your renewal rate is appropriate. Rates often can decline depending on the market. Start planning the renewal process early. At least six months before expiration.

 

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