5 steps to follow before leasing commercial space
Are you considering leasing a restaurant or commercial space for your new business in Cobble Hill or another popular spot in NYC?
Before signing a lease, it's important to recognize that a commercial lease is often more complicated than a residential lease and requires a deeper understanding of laws and property-specific terminology and concepts.
In this blog, we're diving into all you need to know about leasing space in five easy steps. We'll cover everything from location to negotiation, so you'll feel 100% confident signing the contract and launching your new business in the Big Apple.
Things to keep in mind before signing a commercial lease
Commercial leases can be tricky legal minefields, and although the assistance of a property professional is recommended—doing your own deep research can help you avoid any adverse outcomes in the process.
After researching "buildings for lease near me," follow these five steps to help secure the perfect lease for your business and goals.
1. Research the area
Studying the market is one of the fundamentals of commercial property research.
Use the following points as a guide for your analysis:
- Will the location suit your business purposes?
- Is there net positive migration in the area?
- What are the job statistics?
- Is there access to local amenities?
- What is the amount of foot traffic?
- Are there parking options or close access to city transportation?
In addition to the physical aspects of the location, be sure to also research the average rent for leasing commercial space in the area. For this step, you can use comps (comparables) of similar-sized commercial spaces to yours or ask around at local real estate agencies and brokers.
2. Look into the building owner or landlord
Just as a property owner will be screening potential business owners who want to rent their space, you should follow up on the property owner and their rental history.
Use the following steps to help you research your potential landlord.
- The first and most crucial step is to trust your intuition—if something feels off, then there is no pressure to go ahead with the agreement.
- Search for a history of recurring issues, which could include bankruptcy, legal problems, or outstanding liens.
- Ask for feedback from previous or current building occupants under the same owner.
- Access social media, search the property owner's name online in a search bar, or search from a crowdsourcing review site.
- If a company manages or owns the property, you can read online reviews through sites such as Trustpilot.
- Utilize public records, such as the Chamber of Commerce, to review additional history
An experienced tenant broker can also help you evaluate a landlord before signing a commercial lease agreement.
3. Understand the zoning laws
During the research phase, look into building orders and zoning laws in Cobble Hill or other areas throughout Manhattan that could affect your operations.
Issues such as housing allocation, climate change measures, or parking restrictions may impact your business operations. So be sure to research carefully and understand that zoning laws can change over time.
4. Be aware of the expenses involved
Whether signing a commercial or residential lease, one of the most critical contractual components to have clear is the expenses, i.e., who pays what.
Some of the costs over-and-above the rent include:
- Communal building costs
Once you've got a clear picture of the costs involved in the agreement, follow up on how these costs will be determined and allocated. For example, a square foot measurement may determine electricity costs in communal office space, whereas higher rental payments may cover others.
5. Learn the negotiables within the lease
At this stage, you may get into the finer details of a lease. Unless you're a property lawyer or professional NYC property group (like Verada), you may want to consider legal or professional assistance to review and finalize a commercial lease.
Some of the common negotiables in an NYC commercial lease include:
- A tenant improvement allowance: Who pays for the space changes to make it fit your business? A tenant improvement allowance, either through payment or reduction in rent, may be negotiated in your favor.
- Subleasing: Will you be able to sublet unused space to help cover your costs?
- Default provisions: For example, you may be able to negotiate a Good Guy clause or another provision to minimize your costs in case of solvency or bankruptcy.
In addition, one of the critical points of negotiation will be the length of the occupancy. Generally, commercial property owners in Cobble Hill favor longer-term rental agreements—but make sure a lengthy agreement works in your favor, too.
Remember that signing a commercial lease for retail space differs from signing a residential lease for an NYC apartment. Verada helps business owners review these details (and more) when looking for the ideal space to rent.
Follow the steps above to make the right call when leasing commercial space
Leasing commercial space can be an administrative and legal uphill battle. Still, by following the steps above, you'll be able to make a more informed and confident decision before signing on the dotted line.
The team at Verada is on hand to help you understand the processes and technical jargon that holds so many back. Reach out to our team today for expert insight on the commercial leasing process and to help find the perfect location for your new business!
Learn more about finding the ideal location for your business with our free resource, the "Guide to Choosing Your Next Retail Space."
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