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How Can a Small Business Get a Favorable Lease?

Posted by Jonathan Krems | Jul 04, 2024 | 0 Comments

In today's Freedom Friday blog and email newsletter, I'm going to take a deeper dive into a topic I discussed a few weeks ago.  A few weeks ago in the Freedom Friday blog and email newsletter, I talked about the basics of a commercial lease agreement.  In today's Freedom Friday blog and email newsletter, I want to talk more about commercial lease agreements, specifically from the perspective of a commercial tenant.  Many small businesses need to lease an office, a building, or other property for their business's office or retail locations.  Most small business owners look to certain aspects of the properties that they want to lease, such as a good location, sufficient parking, the flexibility to make certain improvements, adequate electricity and utilities, etc.  However, a commercial lease agreement is a contract, and the devil is in the details.  As a small business owner, you never want to sign an expensive, long-term lease with a serious disadvantage that doesn't work well for your business.  In today's Freedom Friday blog and email newsletter, we're going to talk about avoiding all of that, and I'm answering the question, “How can a small business get a favorable commercial lease?”

The first step to getting a favorable commercial lease agreement for your small business is to ask a lot of questions.  You also need to thoroughly examine the property, and it's recommended to get legal advice on the lease before you agree to it.  In a lot of cases, although not all, commercial lease terms are negotiable.  If they are not, you may need to look elsewhere for a building or a lease.   You need to have a good working relationship with your prospective landlord, and you should only consider commercial properties that are a good fit for your business.  Here are four (4) factors to consider in helping your business get the best possible lease terms so you can be successful:

1.  Property Description

The first factor you should consider in helping your business get the best possible lease is the property description.  The lease agreement needs to clearly define the property that is subject to the lease.  If you're going to lease an entire building, the lease might only provide the street address.  However, if you're looking to lease one area of the building, e.g., a suite, the lease needs to precisely define the area(s) of the building which will be leased.  For example, are you also going to lease a storage area or utility closet, separate from the offices in the building that you're leasing?  Many leases also have a common area portion of the lease, in addition to the suite space for offices which you might be leasing.

2.  Use of the Premises

The second factor you should consider in helping your business get the best possible lease is the use of the premises clause.  This clause of the commercial lease defines exactly what activities your business can conduct on the premises, and what activities your business cannot do.  Use of the premises clauses are intended to protect the property from damage or inappropriate use, and limit the liability of the owner of the property.  While the use of the premises clause can also protect your business, if your business changes direction or needs to use the space differently in the future, you may need to renegotiate the terms of the lease in the future.  Thus, you may want to look for a flexible use of the premises clause in negotiating your commercial lease.

3.  Improvements

The third factor you should consider in helping your business get the best possible lease is improvements to the property.  You will rarely find a commercial building for lease that won't need some modifications in order to be a good fit for your business.  Maybe you won't need to make improvements to the leased space when you first sign the lease, but if your business grows or expands, you may need to make improvements later on.  This issue needs to be discussed in your lease negotiations, and you should include in writing in your lease agreement who pays for any necessary improvements to the property.

4.  Signage

The fourth factor you should consider in helping your business get the best possible lease is signage, or additional signage other than what is allowed in the lease.  You may want to have a clear and visible sign from the street, depending on the nature of your business (this does not always apply to professional services businesses like law firms).  You need to make sure your lease agreement does not prohibit or limit signage in a way that will not work well for your business.  If any signage is allowed at all, be sure to research how other tenants in the building set up their signs and make sure there is enough space to accommodate the signage you wish to have installed.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

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About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...


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