Outer Banks Commercial Real Estate and Business Investments with Shore Realty

with Shore Realty



Commercial Leases

It is important to understand what is involved in a commercial lease so you don't find yourself stuck in a bad lease in a bad location. Unlike residential leases where there are law to protect tenants, once you enter into a commercial lease do not have the power of the government to protect you from unscrupulous landlords. In the eyes of the law you are a sophisticated business entrepreneur and you do not need any protection.

Commercial leases come in all flavors and sizes and most of them are designed to give the landlord the upper hand in any situation. It is very hard to break a commercial lease and you stand to lose if you don't understand the lease before you sign it. Most commercial leases are long term and binding.

Commercial leases are open to negotiation. You need the space, the landlord needs you so if you handle it right you can set it up so the terms are more in your favor than if you just sign on the dotted line without asking for some consecesstions

Some of the items to consider before you sign are:

RENT The landlord has a number that will make his bank account very comfortable but if you can not sustain your business with the amount asked for then don't sign. It is better to not pay it up front and get a better price than it is to not be able to pay the rent during the course of the lease.

Does the rent include maintenance, taxes and insurance? This type of lease is called a gross lease. If you have to pay these items separately it is called a net lease. Does the lease contain an escalation clause which will cause your rent to go up automatically at set intervals? Can you renew the lease when it is up or will you be forced to renegotiate a new lease?

The rent is calculated based on the square footage. Does this calculation include any of the common areas like hallways and bathrooms?

DURATION a five or ten year lease might seem reasonable at first glance but what if your business grows to the point you need more space. Or, what if you discover that the location is not as conducive to your business as you originally thought. These are two situations that make a short term lease more desirable to start off with especially if you have renewal options included in the original lease. Can you get out of the lease if your business doesn't perform up to expectations?

LOCATION If your business depends on walk-in traffic does the location encourage pedestrian access? A location without sidewalks, crosswalks, and a crossing light will hurt your chances for success. While parking availability is easy to ascertain the parking lots ingress and egress needs more than a cursory glance. Try driving to the location at different times of the day and different days of the week and find out for yourself if the parking lot is easily accessible. If customers have a hard time getting in or out of your parking lot they will find someplace else to do business.

Another aspect of the location is the interior space. Who will be responsible for alterations like walls and wiring? Will you have to return the space to its original configuration? If you install fixtures who owns them when the lease is up? Who is responsible for maintenance like air conditioning repair.

SIGNS A good sign is worth it's weight in gold. Will you be allowed to put up a sign and will the size and location of the sign accomplish the desired affect. If customers are driving at 50 mph you had better have a sign they can be easily seen or they will drive right past your business and end up elsewhere.

COMPETITION Will you be the only business of your type in the mall. You don't want your competition opening up next door. Will you be able to get out of your lease if the anchor store leaves? An anchor is a big draw for foot traffic. If they leave a shopping center can shrivel up.


Americans with Disabilities Act

The Americans with Disabilities Act (ADA) requires any businesses open to public access and businesses employing 15 people or more, to have public areas accessible to disabled people. There are strict federal guidelines that have to be followed so be sure to have in writing whether you or your landlord will be responsible for necessary modifications. Some common modifications deal with wheel chair accommodations such as doorway size, toilet height, parking, grab bars, ramps and a whole list of federally required standards.






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