When seeking out a commercial space to lease there are a few important factors that should be taken into account to ensure you not only get the best value for money and that the space is appropriate for your requirements but also that you don’t get stung in the future by rising rents and taxes.
It’s best to start with a handful of options, at least four commercial premises if possible. This may seem time consuming and excessive but these will soon be whittled down once you begin comparing your requirements to what each one has to offer.
Once you have your selection of commercial premises you can follow our guide to ensure you get the commercial space most suited to your needs.
Permitted uses of the Commercial Space
It is imperative that you check out what activities are permitted and what activities aren’t with a commercial space. Everything may seem to fit very nicely with the way your business is currently running but as your business grows you may which to take a different route, perhaps providing different services to those that you normally offer, will this affect the use of the space and the terms of the lease?
The Commencement of the Lease
You will no doubt have a date in mind as to when you hope to be up and running in your new commercial space but before signing anything it’s a good idea to check whether there may be a chance of any delay with the premises. If there is work being done find out how long this is likely to take and, if it looks like it may run over schedule would you prepared to put your business on hold for a further few weeks or maybe even months? If you do go ahead and sign the agreement on the understanding that you can occupy the space on a specific day check what protection you have if this agreement falls through and occupation is put on hold.
Termination of the Lease
Ensure that you thoroughly check the agreement for any clauses pertaining to early termination of the lease. If, after a few months, you realise that the space just isn’t suitable for your requirements then you need to know there is the option of terminating the lease early. However, you should also find out what termination rights the landlord has and whether he has the authority to terminate your lease without cause.
Increase in Rent
First off don’t be afraid to negotiate with the landlord if the rent seems a little to high compared to similar commercial properties in the locality. At worst the landlord will refuse but at best he may well be willing to budge, even if it’s just a little. Secondly, check the clauses in the agreement for future rent increases, the last thing you need is to get your business steadily off the ground only to be stung by a rather alarming hike in the rent. Here you need to weigh up certain aspects of your business such as the length of time it may take your customers to settle their accounts and whether, on the odd occasion, your rent payments may be late. Find out if there are likely to be any charges for late payments and ask your landlord, nicely, if he would consider capping any increases, even if it’s just until you get on your feet.
Taxes
Taxes are another area which may prove cause for concern. Weigh up your options, yes this may be the commercial space that you desperately wanted and needed but can you afford to stay above water if there is a sudden, significant tax increase?
Also look into ways around the issue, if there is vacant space on the premises how does this affect the tax and could you use this to cut the cost a little?
Use of the Premises at Weekends
It’s fairly commonplace these days that workers spend some or maybe even all of their weekends and evenings plugging away in the office just to ensure that they meet their deadlines but you may find that the lease has a very stringent 9 to 5 Monday to Friday clause, so make sure you check on this if there is the likelihood that the premises will be used during unsociable hours.
Improvements
It’s very unlikely that you will be able to find a commercial space which has been kitted out with exactly what you need to get you up and running that same day so you will need to bear in mind that some improvements will be required, even if it’s just minor work. When leasing a commercial property which is in need of significant improvement you will need to find out who is responsible for those improvements. If the responsibility lies with you then see if you can negotiate with the landlord to get the rent put on hold or at least reduced whilst the improvements are being carried out. Although in some cases, you may find that the landlord will fit the bill as part of the lease negotiation.
Charges for Common Areas
If your commercial space is part of a larger building which you share with other businesses there will likely be common areas and you should find out who is responsible for the upkeep and maintenance of these areas. It could be that the landlord will take responsibility however; sometimes the costs will be split between all businesses using the common areas so you will need to find out what percentage of those costs will be allocated to you.
Overheads
Again, if you share the premises with other businesses it is likely that all electricity, gas and water will run off the same metres. Find out what percentage of the bills for these utilities you would be expected to pay and how the landlord has calculated those figures.
It is a good idea to ensure you have a solicitor in place who can go through the finer points of a commercial lease with you.