Biggest Mistakes Tenants Make When Leasing Commercial Real Estate Space

biggest mistakes leasing commercial real estateLeasing commercial real estate space is a lot more complex than leasing an apartment however too many tenants take it for granted and end up making huge mistakes. To help minimize any potential risks and other costly errors we have compiled a list of some of the biggest mistakes tenants make when leasing commercial real estate. If you have any questions about renting commercial real estate feel free to contact us.

  1. Not starting the process early enough – If you wait until the last minute to find commercial space you may have a hard time finding exactly what you need especially in a tight market. You also transfer negotiating power to the landlord as they know you have a deadline and HAVE to be in a space sooner than later.
  2. Thinking rent is the ultimate measure of your deal – too many people compare their lease rate to others in the same office or retail building. No deal is the same. Just because someone else told you they negotiated $30 sf doesn’t meant their deal is better than yours if you are paying $35. More than likely they received a lower tenant improvement allowance to received fewer concession in other areas. There is more to a deal than just base rent.
  3. Lack of planning – Believe it or not a lot of companies don’t have a clue about their exact space needs. They lease space based on their gut feeling. A good architect and your commercial agent can help you figure this out. You also need to not only have an exit strategy but also plan for the future. What if you outgrow your space before the lease expires? What if you need to downsize? It’s important that you plan for not only your current space needs but also what those needs may be in 2,3,4, and 5 years. 
  4. Not asking enough questions – There are tons of questions you need to ask a commercial landlord. Not knowing the answers to these and other questions could mean that your leaving money on the table during negotiations.
  5. Choosing a bad location – Some companies pick a retail space location just because it’s the cheapest. While this may work for some tenants others will find out later that their poor site selection cost them their business. Location is very important to consider when choosing commercial real estate. You don’t want it to break the bank however you also have to ensure that it meets your companies, employees, and clients needs.
  6. Not reading & understanding what the commercial lease clauses mean – There are a lot of clauses in a commercial lease contract and most of those will be in favor of the landlord. It’s important to understand what those mean and how can they positively or negatively impact your business. Your commercial realtor and attorney can help you understand these and negotiate clauses that will be more in your favor.
  7. Not using a professional team to represent your best interests – Unless you are in the commercial real estate business you probably are not familiar with market conditions and what can be negotiated. To protect yourself consider hiring a commercial real estate agent, a good commercial real estate attorney, and an architect to help you confirm that a space will meet your current and future needs.
  8. Not knowing what can be negotiated – How do you negotiate a commercial lease? Do you know what to ask for? What is market? If you don’t know what you are doing it is possible to over negotiate a deal and make the landlord not take you seriously. You can also not negotiate enough and leave money on the table. It’s a fine balance that is learned with years of experience.
  9. Not inspecting the commercial property – What condition is the HVAC in? What about the lighting and bathrooms? Does the space need a lot of work such as flooring and paint? ? Who is going to pay for all that? Make sure you know exactly the current condition of the space and how much it will cost to fix all of the repairs


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