Mistakes to Avoid When Leasing

Story by IPB Industrial
May 11, 2021

How to avoid common leasing mistakes any business tenant can make without proper guidance

Whether you are relocating a growing business or moving into your first brick and mortar, signing a commercial lease is a major business decision and a huge financial commitment for business owners.

Unfortunately, some business owners aren’t focusing on the most important details when leasing. These mistakes in leasing can be costly – even detrimental – to the life of your business. 

While relocating your business shouldn’t be too frequent, it’s important to understand that landlords, attorneys, and property owners deal with commercial leases on a regular basis. With this advantage over business owners, it’s paramount to avoid the common leasing mistakes that tenants make.

Mistakes to Avoid When Leasing

Tenants Flying Solo

We get it: Becoming a business owner has its own way of fostering independence. In the beginning, you relied on only you to figure out all of the major decisions and processes; however, leasing is one you should leave to the experts.

Even if you have experience in real estate, making the decision to hire a commercial real estate broker can work wonders for your sanity and your business. 

Brokers have the knowledge and skill to seek out just the right property that meets your needs and your budget. They can also negotiate leasing terms on your behalf, leaving you to continue running your business without interruption.

Tenants don’t understand lease terms

Never sign anything with terms you don’t understand. With a broker, you never have to worry about industry jargon or confusing lawyer-speak.

Brokers are trained and skilled in understanding leases and terms that aren’t common knowledge to business owners. Then, they advise you on what should be negotiated and answer any questions you may have.

Understanding the leasing terms and agreements will save a lot of disappointment, legal issues, and conflicts with the landlord and other tenants.

Here are a few items to focus on:

• Lease term
• Rent obligation, including increases
• Repair and maintenance obligations

Your commercial real estate broker is there to help and support you through this decision. If there is a clause or detail that you do not understand, make sure to ask plenty of questions.

Focusing only on price

As a business owner, costs are a major focus, especially when it comes to big expenses like real estate. 

While budget is an important aspect of acquiring a property you can maintain and afford, don’t base your decision solely on price. 

Other important factors include:

• Versatility of the space, including the opportunity for expansion, layout, etc.
• Location, proximity to competitors, transportation, nearby amenities
• Safety of employees and business

Underestimating the process

Just like finding the perfect home, finding the perfect rental space can be a long process. Make sure you aren’t waiting until your current space is bursting at the seams with equipment or employees before beginning the search.

Give yourself plenty of time to obtain proper financing, negotiate terms, search for properties, and make improvements, if necessary. Weighing all of the options before signing on the dotted line will prevent you from making a hasty decision you will regret. 

If you plan to relocate your current business, we recommend beginning the process at least 12 months before your current lease expires. 

Searching for the right property isn’t a decision to be made lightly. There are many more factors to consider other than budget, like real estate representation, leasing terms, and more. 

If you have questions about your commercial lease or relocating your business, contact our team for more information.

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