Feb 19, 2018

Commercial Leasing Mistakes to Avoid

By Don Catalano


Commercial Leasing Mistakes to Avoid.jpg

Commercial leases are quite different from residential leases in the sense that their terms are often far-reaching and can considerably impact the financial well-being of a commercial tenant’s business. This makes negotiating an office lease one of the most crucial business decisions, and one of the biggest financial commitments that corporate tenants can make for their companies. Here are the various ways in which they can avoid costly mistakes when leasing commercial space:


Avoid Procrastinating

Having the mindset that there will always be rental space available whenever the need for office space arises is a costly mistake. A corporate tenant should not underestimate the duration of time it takes to find an ideal location and negotiate a lease. It’s advisable to look for office space at least 12 months before the current lease expires. With adequate time, a tenant will be able to familiarize himself with the market trends, explore the available opportunities, and obtain more negotiating leverage.


Consider All Critical Factors

A tenant’s decision to take up space shouldn’t be based solely on the quoted price. Even though finding office space that fits one’s budget is important, it’s also important to put into consideration other critical factors such as the location, availability of amenities, versatility of the office space, infrastructure, and proximity to competition, etc.


Think About the Present and the Future

A corporate tenant must consider the present and the future financial standing of his business when negotiating a lease. He must ensure that the terms of the lease are favorable based on the company’s present financial situation. He must also ensure that the terms will be favorable in future. In case of significant success, the option for expanding should be available. In case of business’ failure, the option to sublease should also be available.


Read and Understand the Lease Terms

It’s crucial for a tenant to thoroughly read the lease terms in order to avoid future conflicts between him and the landlord. Important aspects to pay attention to include the nature of the lease term, nature of the rent obligation, nature of repair and maintenance obligations, and assignments and subletting obligations, etc. If there are clauses that don’t work in the tenant’s favor, he should negotiate the terms to get a fairer deal.


Solicit the Help of a Tenant Rep Broker

The to-do and not-to-do things during commercial real estate leasing are many, which can confuse and put a lot of pressure on a corporate tenant. It helps to involve an expert in the negotiation process so that the tenant can avoid making mistakes unknowingly. Soliciting the help of a seasoned tenant rep broker can help take the burden off the tenant’s shoulders.

Even seemingly small commercial leasing mistakes can have a huge negative impact to a business in future. Taking the above steps can prevent a corporate tenant from entering into an agreement that could turn out poorly for his business. Avoiding costly mistakes with commercial leasing can keep a commercial tenant aligned.


Commercial leasing articles we thought you might like:

Commercial Office Leasing 101

10 Commercial Leasing Tips for Tenants

5 Things To Do Before Leasing Office Space


Subscribe to our blog for more great CRE tips!!
Subscribe Now


Office Space Calculator Use Now
10 Steps to Cutting  Your CRE Expenses Download
Improve EBITDA by Cutting Your RE Costs Download


Don Catalano

Don Catalano