The Art of Commercial Lease Analysis: Uncovering Hidden Opportunities

The Art of Commercial Lease Analysis: Uncovering Hidden Opportunities

Getting a lease agreement for a commercial space is more common than you think. In the United States alone, there are over 360,000 commercial leasing businesses.

However, there are some things that you should know before you sign a lease agreement. One of these things is to look at the commercial lease analysis.

What goes into this? This guide breaks it down.

Create Flexibility

When you are negotiating a commercial lease, one thing you want to try to include in your lease agreement is flexibility for your lease terms. The main things you want with this are the ability to get out of the lease early or the option to renew the lease early.

If you are building up a business in one area, the last thing you may want is to get kicked out of the property if it is vital to your organization. At the same time, you may want to have room to relocate if you discover that the location is not working out as well as you thought.

Use a commercial lease analysis to determine what kind of clauses are needed for this. You may need something with the property owner that states that you are allowed to terminate the lease about six months early without penalty. Or, you could put in a clause that allows you to renew the lease a year early.

Look at this closely and determine what clauses would benefit your business.

Changing Market Conditions

The next thing you need to do is constantly keep an eye on market conditions. This can be for your industry or even for your local area.

In Layton, the current poverty rate is about 7%. However, what if that were to go up to over 10% in the next year?

In that situation, you may question if having a commercial building in Layton is right for you. As a result, you may want to keep your options open about when the market conditions work in your favor and when they may dictate a big change.

Consider Other Costs

Finally, you can't just think about the rent when considering the costs you will incur on this building. You also have to account for things such as utilities, annual maintenance, taxes, and more.

Let's say that in the lease agreement, you are the one that is responsible for paying all of the utilities. If you anticipate losing a lot of electricity, for example, you may consider asking the property owner to negotiate a bulk rate. Or, you could ask them to charge you a flat fee for utilities in this situation.

Get a Commercial Lease Analysis

These are the main factors to consider when it comes to a commercial lease analysis. Remember, you want a clause that allows you to get out of your lease agreement and also renew the lease agreement if you so choose.

Then, you need to think about things such as changing market conditions and what other operating costs you have for this building.

Are you considering leasing a property? Message us here to see how we can help.