Questions to Ask Landlords Before Signing a Commercial Lease

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When determining which commercial space is right for your business there are a lot more things to consider than just the rental rate. Landlords know that most tenants are not familiar with the intricacies of commercial leasing and if you don’t take the time to ask the right questions you could be taken advantage of. Keep in mind the landlords goal is to negotiate the most money out of the deal as they can. The more money they make the better their return on investment. As a tenant you want to negotiate the lowest out of pocket expense and lease terms that give you as much control as possible. To help get you started below are a few questions you need to ask in order to negotiate the best deal possible.

1. What Type of Commercial Lease is Being Used? – It’s important that you understand the type of lease being used and what obligations you will have after signing it. There are several different types of commercial real estate leases that landlords use and it depends on the market you are in, the type of space being rented, or just the building owners preference. Commercial lease types used could be gross leases, modified gross, triple net (NNN) leases, full service leases, etc. For example when renting office space you will see some landlords use gross leases however many are converting to NNN leases because it’s easier to pass through all the expenses to tenants. Again, before signing a commercial lease find out what type of lease is being used and what your obligations are.
2. Are the Commercial Lease Terms Negotiable? – Pretty much all commercial leases are landlord friendly. Find out how negotiable the landlord will be when negotiating the lease. If you find out they are not give on anything it may be a sign on how not favorable they will be in the future. It’s really important that you know your current and future needs of your business and what lease terms are or will be important to you. Stick to your guns. If the landlord is not willing to give on anything then find a landlord that will work with you
3. Is the Landlord Willing to Do Any Tenant Improvements? – 99% of the spaces you see will need some sort of improvements to accommodate you needs. I have not seen too many spaces that are move in ready. Ask the landlord if they are willing to make any improvements and/or if they will let you make improvements on your own.
4. What Internet Vendors Service the Building? – The last thing you want to do is sign a lease then find out the internet service providers cannot accommodate you needs. Do you need fiber or gigabit? Which internet vendors service the building? What if you use AT&T in one location and it’s important that your next location also offers AT&T, however they only have Grande? What if your a gaming company that has to have fiber and you find out the building your in does not have it? Bottom line you need to ask the landlord which vendors service the building. What you will find is that most agents don’t know so you will have to do your own due diligence.
5. How is the Phone Reception in the Building? – Another thing tenants find out after it’s too late is that the mobile phone reception in the building is not great. For example their company may use AT&T wireless and then find out that the reception is so low they have to walk outside to make phone calls. Sometimes having a cell booster installed on the rooftop will enhance the connection. Make sure to ask the landlord if they will allow you to have one installed. Or better yet ask if they will install it on their dime.
6. What Amenities are Available? – Does the building have a building conference room, fitness center, deli, covered parking or other amenities that are free for Tenants to use? If they are not free how much do they cost?
7. Are You Allowed to Assign or Sublease the Lease? – Fact is not every business is successful. What if your business fails or you grow so rapidly that your space won’t accommodate your needs anymore and your building does not have anymore vacant space? What if you sell the business? Will the landlord allow you to assign or sublease the space? If you sell the business and assign the space will the landlord let you off the hook or will you always be held accountable for the lease even if you sold the business?

 

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