Business-Minded Legal Solutions

Well-written leases can help your commercial property stand out

As Houston continues to grow, the real estate market is booming right along with it. While this is good news for property buyers and owners, years of oversupply mean the market to attract commercial tenants continues to be competitive.

One aspect of a rental that many landlords do not consider is their lease. A well-made lease may be the advantage you need to get a leg up on the competition for tenants in commercial rental spaces.

Know your market

It’s important to understand who your audience is when you are creating your form lease. Are you aiming for entrepreneurs looking for their first business space or are you targeting big box stores, chains, franchises and a more established clientele?

This is the first thing you need to determine before finalizing a lease. If you are looking for a stable group of renters, you may want to insist on a longer primary term.

On the other hand, if you are okay with high turnover rates, you can offer much shorter terms. It is possible you may be able to collect higher rent as a tradeoff.

Be realistic with your property

Too often, commercial building owners cannot separate what they’ve paid for the space with what its value is as a rental unit. This leads to uncompetitive lease rates and vacant spaces.

Do not let your personal investment affect your appraisal of your rental. Do your homework. Talk to businesses around the area and determine what the rental range is for the location. Don’t just pick a number because you feel it makes sense.

When a prospective tenant asks about rent, you should be able to justify every penny.

Have clear expectations

A lease needs to fully spell out all payment expectations and duties of parties. This allows prospective renters to fully examine all considerations.

Make sure every cost expected from tenants is clearly laid out. Outline the distinct responsibilities for yourself as the landlord and for each tenant.

The more information you have in a lease, the easier it is for both parties to understand what lies ahead in their relationship.

This can lead to fewer arguments or broken lease agreements.

Being flexible in a competitive market

Remember that your situation can change, and your lease should reflect this. If you need to pursue different clientele, update your lease to reflect the change.

If you are targeting a new market, it’s wise to rewrite your lease to better suit their needs. Don’t just create a form lease and stick with it. Be flexible.

The lease agreement is one of the most important documents between landlord and tenants. If you have any questions about creating a comprehensive lease, a skilled real estate attorney can help.