The Importance of Due Diligence When Leasing Retail Space

When purchasing a retail or other commercial property buyers typically negotiate time to perform “Due Diligence” to inspect and confirm certain facts about the property and it’s potential uses, however these items are often overlooked when leasing retail space.  Even if you are leasing retail space it’s important that the Due Diligence process be followed.  Below are a just a few Due Diligence items that you must consider when leasing retail space:

Exclusivity Clauses That Other Retail Tenants May Have

The landlord may tell you verbally that you have nothing to worry and that your use is allowed in the retail property, however it’s important that you confirm this.  Ask to see a copy of the exculsivity clauses for all of the tenants and have your real estate lawyer review them.  Confirm that the services and products that you intend on selling will not conflict with the other tenants.  The last thing you want is for the tenant and their lawyer to to review the actual text and find that you violating their exclusivity clause and then present you with a lawsuit.  At this point it’s not the landlords problem……..it’s yours.

Receiving and Shipping Products

If you need to receive and ship products make sure the parking lot has plenty of room for the trucks to get through.  Obviously it’s also important to know the types of trucks that will be delivering or picking up your goods.

Common Area Maintenance Charges

Ask to see a copy of the common area maintenance (CAM) for the last few years.  Wouldn’t it be nice to know what currently and historically has been included in CAM calculations?

Request to See Some of the Title Work

The title work can confirm that the owner is in good standing with the mortgage company or if the lender is required to approve your lease. Additionally it can reveal restrictions and exclusive rights of existing tenants, ensure the accuracy of the owners name, etc..

Zoning and Use Policies

Just because the landlord says it’s ok for you to lease space and operate your business in his retail center doesn’t mean the city will allow it.  You know your business better than anyone else.  Make sure you find out what the property is zoned for and what retail uses are allowed.  A quick call or visit to the city planning and zoning commission is necessary to ensure that the retail property is zoned property and that the products and services you provide are allowed in that area.


Learn more specifics about Retail Space for lease in Austin www.austintenantadvisors.com/retail-space


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