Questions You Should Ask Before Renting or Leasing Space for Your Business

Whether you’re venturing out with your first small steps into the realm of small business, or you’re  opening your 20^th location, you want to be sure that a space will be a good fit for your business before you sign a lease. While renting a new space can mean growth and possibly more visibility for your business, charting the open waters of a commercial lease can be tricky.

Things to Consider Before You Start Looking at Commercial Spaces 

Will Your Business Rely on Walk-In Traffic?

One of the first questions you should consider is how important foot traffic is to your business. Do you need customers constantly walking or driving by, or will the space be primarily used for offices or manufacturing goods?

How Much Space Do You Need, and What Amenities? 

When calculating how much square footage you need, don’t forget about things like storage and if your team is planning to grow down the road. Think about what amenities would be nice to have, as well as which are must-haves. These could include things like private bathrooms, a kitchen, changing rooms, elevators, or a loading dock.  

Do Some Homework   

Before you call an agent or start viewing spaces, research what typical rent costs are for the areas you are looking in. Consider looking at local market demographics, as well as what your local competition would be.

Things to Consider Once You Start Looking at Commercial Space 

What Are the Lease Terms? 

Ask what the minimum lease term is. Because landlords want their spaces to be occupied, a longer term lease will typically cost less than a short-term lease. Ask about renewal terms, and if utilities are included. Another question to bring up is when rental payments begin. If you are able to move in mid-month, is the rent prorated?

Are There Any Zoning Restrictions? 

Learning about zoning restrictions early on in the game will help you eliminate spaces that simply will not work for your business.

Who Handles Improvements? 

If you want to customize the space to your business, who will pay for those improvements? Will the property have to be returned to its original state once the lease is up?

Who Handles Maintenance and Repair? 

Ask who is responsible for situations such as roof leaks.

Know What Your Insurance Requirements Are 

Your lease should spell out the insurance coverage you need and who will pay for it. Having proper insurance coverage isn’t just a precaution, it’s a smart investment in your business’s future. Here are some common insurance mistakes:

• Not understanding policy details: Make sure that you understand how your policy works, including its coverages, limits, deductibles, exclusions, and other terms and conditions. Doing so can help you to proactively identify any questions or concerns that you may have, so that you may take steps to address them before a loss occurs.
• Underinsuring or skipping coverage: A robust insurance program is an important risk management tool for your business. Choosing to buy policies with low coverage limits, or choosing not to buy any insurance at all, can leave your business unnecessarily vulnerable to financial risks.
• Not updating policies: Failing to reflect new hires, equipment, or services can lead to problems with your insurance policies. Be sure to timely communicate with your insurance agent about any changes to your company or its employees, property, or operations.

At Cross Insurance, we work with dozens of he nation’s leading insurance carriers. With an extensive list of contacts in the industry, we can find solutions for your team, from General Liability to Workers’ Compensation.

Ask About CAM Charges   

Common Area Maintenance, or CAM, is a process of billing tenants for maintaining common areas of a commercial space. Not every commercial lease will use CAM charges. It’s wise to ask if CAM charges will be utilized, how they are calculated, and what they include.

Ask About Garbage Disposal  

Overlooking this common amenity could lead to headaches later. Ask if there is on-site trash disposal, and if there is not, what services other tenants use.   

Parking  

How many parking spaces will you get? Is there additional space to park if you need it in the future?

More Tips 

Commercial leases can be complicated. You may consider consulting a real estate broker, or even a legal professional to assist you.

 

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This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.