|Should I lease or look to purchase Commercial Real Estate?
Most business begin with a commercial lease for it's many benefits. Although in the long run it may cost more to lease than to purchase, a lease does not require you to secure a loan. Depending on your lease agreement, a lease also alleviates certain responsibilities that come with ownership. Your lease payments are also tax deduct able.
Ownership also has it's advantages. Property greatly increases the value of your business and serves as a more reliable long term investment for your company. As an owner your rent will not fluctuate, and you will be more likely to stay in an established location instead of moving due to unfavorable changes in your lease.
Some questions to ask before taking over a lease:
1. Make sure you understand the complete square footage you will be taking over.
2. How much shared square footage are you responsible for? i.e. hallways, bathrooms, stairs and elevator space.
3. Many leases increase over time, how substantial are the increases?
4. If repairs to the building or utilities are needed, who is responsible to make them? If the landlord is responsible can you as a tenant make these improvements and have them deducted from your rent?
5. Does the lease clearly state how disputes will be handled?
What is a commercial lease?
A lease is an agreement between a tenant (your business) and a landlord (the building owner or management company) for the use of space for a set amount of time. A lease may be month to month or last up to 15 years depending on your contract.
Can I negotiate the terms of my commercial lease?
Most lease terms are negotiable, as with any long term relationship both parties need to communicate and come to an agreement as to which will benefit each other fairly and equally. If the market demand for space is high, the room for negotiation will be more limited, but a good idea is to lengthen the term of your lease in return for a reduced rate or other concessions.
There are also many things in the lease that can be negotiated besides just the monthly cost. You may be able to extend the time between rent increases or receive discounts on repairs, utilities and taxes.
As with any commercial agreement it's best to consult an experienced commercial real estate agent to help you with any negotiations.
Please contact me if you have any more questions: (970) 241-2909 or firstname.lastname@example.org