How to Lease Commercial Real Estate

Real estate leasing is an agreement between a landlord and tenant where the tenant will use a property for a couple of years and give monthly or annual rent. It’s a great concept; if you want to start a business like a restaurant, office, warehouse, you can lease a commercial property.

Table of Contents

Guide to Lease Commercial Real Estate

You can follow this step-by-step guide to lease a commercial real estate property:

1. Set Your Parameters

Before you get started with leasing commercial real estate property, you need to set your parameters for that. The reason behind this there is a wide range of commercial properties available in the real estate market that you can use. But, you need to choose the right one that fulfills your needs and requirements. You can do that by implementing these parameters:

Ideal customer.
Property type.
Maximum budget.
Perfect size.

2. Hire a Commercial Real Estate Broker

There are two types of brokers who work in this commercial real estate leasing. One leasing agent and another are tenant brokers. Leasing agents are hired by landlords. On the other hand, tenant brokers help tenants.

3. Understand Commercial Lease Types

You are going to lease a commercial property. So, it’s important to get a good understanding of what type of lease you are associated with. There are three types of leases available, and the key difference between them is the way of cost and fees. Those three types are:

Full-service lease.
Net lease.
Modified gross lease.

4. Detect the Right Commercial Property

You must have to find a commercial property that takes cares of these requirements:

Location – The property should be around your ideal customers.

Amenities – Property must provide all the amenities that you need, and you must be accessible to all the amenities too.

Landlord’s History – The landlord is going to control your lease agreement, rent rates, and rental increases. So, you must know his behavior and history with previous tenants.

5. Negotiate

You have chosen a commercial property for the lease and now good to go. But wait, you have to negotiate with the owner about legal terms and conditions. The negotiation is going to be requested by you or your broker to the landlord’s broker. You have to write a business letter that includes your offers and requests.

In that letter, you must include these things:

Statement of your intent to lease.
Your business’s description.
List of services and products that include pricing too.
A number of years in the business.
All the terms that you are proposing.

6. Leasing vs. Buying

You have seen a wide range of spaces. Now, you can think it is worth buying or leasing. Well, I said it because if you like the property, then you should buy it. The reason is the commercial real estate will give you the advantage of equity, depreciation, and other things. But, if you lease it, you won’t get those advantages.

Conclusion

You must take a good look and carefully choose a commercial real estate property for leasing. That is because a commercial property leasing agreement involves a couple of years. So, you have to choose the best that has a good location and other ideal amenities.