What Is A Commercial Retail Lease?

Written By Alla Levin
November 01, 2022

What Is A Commercial Retail Lease?

A commercial lease gives you the right to occupy retail space. It’s a legally enforceable contract between a landowner and a business occupant that spells out any stipulations you must abide by.

Commercial agents may also negotiate the lease on your company’s behalf. In the lease, the “Lessee” is the person who owns the premises, while the “Lessor” is the one who rents them.

A commercial lease is an essential step for any entrepreneur. Whether you’re looking for a place to open up shop or you want professional office space, a commercial lease can be a big deal. 

First, however, you need to know precisely what you’re doing before you sign anything. A commercial property that houses your business’ equipment and staff involves significant risk. Leases are long-term, with more variables and complexities. They’re liabilities, but they can be an asset too.

What should a commercial lease include?What Is A Commercial Retail Lease

Before signing any leases, be sure to seek professional advice. Here are some significant components to consider when considering leasing options.

  • Leasing terms/types;
  • Amount of rent;
  • Security deposit;
  • Permitted use of the property;
  • Reserved for exclusive use;
  • Maintaining and renovating;
  • Exterior Appearance;
  • Insurance risks;
  • Americans with Disabilities Act Compliance;
  • Guarantee;
  • Amendment/modification/termination clauses.

Researching the area, landlord, and lease details

Before signing a commercial lease, you’ll need to do some research. Before starting any investigation, be sure to follow these steps.

Understand the area

Consider where you want to be when searching for a new place to open up shop. Location matters for any small enterprise, but especially for one that sells products or services to the public. If you need to know where you want to go, start by analyzing the market and finding your target audience. You may need to spend extra cash renting an office space, but it could pay off big down the road.

Research zoning laws

Another aspect to consider is the zoning regulations. While your property manager might allow you to run a restaurant within your apartment complex, you should check whether your community’s rules permit such an activity.

It would help if you also verified whether the management of your local government would allow you to do so. In case you find out that your property does not comply with the zoning laws, you’ll have to change something about your plan before you start working on it.

How much space do you need?

One of the most important things when looking at commercial real estate is figuring out how much square footage you need. You want to spend only a little money on something you won’t use, but you also want enough room to grow comfortably. The best way to figure out how much square footage is needed is by giving a rough estimate of how much you think you need.

To estimate the size of your store based on your annual revenue goals, use this simple formula:

Gross Sales Volume ÷ Sales per Square Foot = Size of Selling SpaceWhat Is A Commercial Retail Lease

It would be best if you also considered including space for the additional areas within your retail location, like:

  • Stockroom;
  • Office spaces;
  • Restrooms;
  • Dressing rooms;
  • Storage space;
  • Checkout counter;
  • Breakrooms.

Work with a Listing Agent

A commercial agent is the best way to know the real estate market and connect you with the best properties. You don’t need to hire an agent if you’re working alone; however, having one makes things much more manageable. 

They help navigate legal issues, find spaces, and get everything for closing, among other things. One of the drawbacks of working with an experienced realtor is the commission fee. However, the price is well worth the services provided.

There are several ways to go about hiring an agency for commercial representation.

You may get good leads by asking other local businesses if they’ve used an agent. There are commercial property listings sites that offer features to help you find commercial real estate brokers. For example, you can search by city, state, property types, and even language to help you find a good match.

It is an excellent resource for finding out everything there is to know about commercial real estate and searching the commercial marketplace.

Type “commercial real estate agents” into Google, showing you commercial real estate agent sites and local agencies you could contact. You should also check whether the agents you’re considering are a good fit by looking at specific criteria:

Expertise in your particular field

In larger urban centers, commercial brokers will often focus on specific types of properties — offices, retail space, residential units, etc. Make sure you’re dealing with a broker specializing in your property type. Brokers with specialized knowledge can also offer additional services such as negotiating leases, preparing contracts, and providing legal advice.

Establishment in your area

You will want to look for agents that work in your specific city or even neighborhood. This expertise means you will have a competitive edge while searching and negotiating contract terms.

Reviews and referrals

Try to look for reviews on your agent. Ask them for a referral. This will give you an idea of whether they’re communicative and how well-suited they are to working with their clientele.

A record of successful deals

Select an experienced real estate broker who has already sold several properties. They will be able to guide you through the entire leasing procedure. To ensure that you will have an excellent experience hiring an agent, arrange a face-to-face meeting before making any decisions.

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