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Some pitfalls in first-time leasing of commercial real estate

There are some real dangers that a business owner in Texas may encounter when leasing its first commercial business space. Experts have postulated the common mistakes that first-time lessees may encounter when leasing commercial real estate. One common mistake is to commit to a rental rate that is higher than the business can afford. A basic site is sufficient in the early stages of the business and the owners should not get obsessed with glitter and fancy facades.

Business owners may overestimate the number of staff that is needed in the beginning. This may result in leasing more space than necessary. The slow pace of hiring and getting people acclimated should be considered. In addition, the proposed contract should be reviewed with a fine-tooth comb.

That simply reflects that most leases are drawn up by landlords to favor landlords. However, in the commercial arena, negotiating some provisions out of the lease can be realistic. It is best to know the limitations, restrictions and obligations that the business is taking on when it does sign the lease agreement. All the foregoing advantages will be imparted to the business by an experienced business law attorney. Trying to interpret the lease and other legal documents on one's own is one of the major mistakes that small businesses make.

The owner should also be prepared to pay a year of rent in advance. If profits do not materialize in the first year, the leased space will be covered. The choice between having people onboard or renting space should fall on the side of people. The drive to have one's own property is sometimes ego-driven and unnecessary.

The business may also benefit by using a tenant rep broker. An experienced Texas commercial real estate broker may negotiate a better price and save the business thousands in rental expenses. It is also best to go with a shorter lease rather than a longer one. This just leaves open the options for the future. A transparent lease arrangement is best, meaning that the tenant will do best by being open about the intended use and expectations for the property.

Source: forbes.com, "Nine Mistakes To Avoid When Leasing Your First Commercial Space", Dec. 29, 2017

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