Every Clearwater property owner/lessor and tenant/lessee should know these five facts before agreeing to a commercial lease in Clearwater.
Property owners in Clearwater should understand the basics of commercial leases. Even if you are already involved in a commercial lease, you can still benefit from learning more about these business contracts. If the lease terms are not fair or do not favor your interest, you will not be in a position to succeed. Failing to sift through the language of a potential commercial lease with a fine tooth comb will cause you issues in the future. Below, we take a deeper look at the details of commercial lease negotiation in Clearwater.
1. Lease Length is of Particular Importance
Once you have pinpointed the perfect commercial rental location, it’s time to complete the rental application and officially applies for the lease. One of the first terms to note is the length of the lease. A lease that extends one or two years is ideal for small businesses. A lease of this length does not restrict the tenant to this location for an excessive period of time, yet it provides the option to stay if the fit is right. However, businesses that are dependent on their location will likely favor a longer lease. When in doubt, you can opt for a happy medium between a short lease and a long one. Ideally, there will be an option included in the lease for the tenant to renew.
2. Commercial Lease Negotiation in Clearwater: Beware of Hidden Costs
A net lease is one in which there are costs beyond the rent. A gross lease is one in which all costs are included. Commercial leases tend to place responsibility on the tenant for costs such as the upkeep of common spaces to regular maintenance (“Common Area Maintenance” or “CAM” expenses). All of these details should be clarified right away with the assistance of an experienced real estate attorney. Negotiate this portion of the lease before other sections to make sure both parties are on the same page. You should definitely consider negotiating a cap on CAM. Above all, make it perfectly clear as to which updates and maintenance are the responsibility of the tenant and which are the responsibility of the landlord.
3. Consider Comparable Rents
The rent level is one of the main concerns. Find out how much similar properties are leasing for in the area of Clearwater you desire. Once you know the going rate, you can negotiate a price that makes sense for both parties. When negotiating options for renewal, make sure to address rent increases so you aren’t surprised down the line with an unexpected lease rate. It also helps to determine a cap on potential rent increases during commercial lease negotiations in Clearwater to ensure that monthly cost stays within your price range.
4. Examine the Termination Clause
Don’t gloss over the fine points of the commercial lease negotiation. Every last detail matters. The terms of the lease in relation to potential default and termination are very important. You should secure a clause that provides you with ample time to cure default prior to eviction. A termination clause that permits paying a few months of rent instead of the entire remaining amount owed on the lease will certainly help.
Furthermore, potential penalties for the early termination of the agreement must be determined prior to signing. So be sure to read over your commercial lease in-depth to gain a firm understanding of all its terms. This extensive analysis makes you aware of benefits available and provides you with the opportunity to request changes.
5. Request Favorable Modifications
Do not shy away from requesting favorable clauses during your commercial lease negotiation in Clearwater. If you are especially interested in certain restrictions regarding renting out other units on the premises to similar businesses or a co-tenancy clause to break the lease if another tenant leaves, the time to address these concerns is now. You can even use this opportunity to negotiate for improvements to be made to the property prior to move-in.