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Consider these factors when searching for, and negotiating leases on, commercial space

Your office space is much more than just the address you put on your letterhead. The space dictates what your business is and what it can become. It also sends an important message to your current and prospective clients.

Therefore, it is crucial that business owners consider all available options when searching for, and negotiating a lease on, commercial space. Lease agreements can either prevent, or cause, serious disputes, so it important that they be executed only after thorough examination.

Backing up a bit, you should understand that there are three different types of commercial leases: gross, net, and modified gross. You can learn more about the different types of leases in this article from 42Floors.

Broadly speaking, commercial leases vary in how rent and other expenses are assessed and invoiced. With that in mind, you should consider the following questions when searching for commercial space:

  1. How much space do you need?  Do you simply need private office space, or are you interested in shared spaces, like lobbies and conference rooms?
  2. What will you be doing in the space? Your activities may affect utility costs, maintenance requirements, and repairs beyond normal wear and tear. Depending on what you will be doing in the space, you may be able to negotiate the sharing or splitting of expenses with the landlord.
  3. Is your revenue steady or staggered? Some companies earn far more during certain times of the year, while others have fairly steady revenue streams. This can affect things like utility consumption. Depending on when your business generates its revenue, it may benefit from either steady or variable rent and utility rates.

Finding commercial space, and subsequently negotiating a lease on that space, can be more difficult than anticipated because there are so many variables. Unfortunately, the cost of signing a lease that is unfavorable for a business can be quite high.

In order to find the right space, and secure fair and appropriate lease terms, business owners should work with an attorney familiar with the challenges of commercial real estate.

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