A lease is a legal contract between your business and a landlord. Most businesses start in leased space. Here are some steps to help you get a favorable lease agreement.
To lease space for your business:
- Identify the prerequisites of the space you need to lease (location, square footage, parking, any other critical factors.
- Look for possible locations for your business.
- Contact the leasing agent at the locations that seem possible, asking for rates, terms, and any other needs you have identified.
- Visit the possible spaces to inspect how well they meet your needs.
- Once you have chosen your preferred space, begin negotiating the terms of the lease.
- Make certain the lease includes clarification of hours of use of the common areas by yourself and your customers.
- Ascertain what type of security and upkeep the facility provides.
- Talk with other businesses leasing in this building to find out what their experience has been and terms they wish had been included in their leases.
- Consider negotiating for a one year lease with option to renew, rather than a two year or longer lease. Then, if you grow faster than anticipated, you have the freedom to move or expand.
- Ask for the right to expand within the building should you building grow. One way to do this is to have the right of first refusal on any space that comes open in the building.
- Find out what the rent includes: taxes, insurance, repairs, utilities?
- Ask what security deposit is required.
- Specify the improvements the landlord needs to make before you occupy the space. Improvements can range from a simple coat of paint to major remodelling of the space.
- If the landlord will not pay for remodelling, but you like the location, write into the lease a clarification of what improvements you are allowed to make at your own expense.
- Make certain the person signing the lease is authorized to commit to the terms of the lease.
Tips:
- There are varying time lengths on lease agreements. However, a lease for more than one year must be in writing to be legally enforceable.
- A 'lessor' is the landlord; a 'lessee' is the tenant.
- The landlord will most likely present you with a written lease. Consider it a starting point for negotiation, not something you need to accept if you are taking the space.
