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Leasing Commercial Real Estate: Nine Mistakes To Avoid

By Howard C. Stross
August 05, 2014

As a Florida board certified real estate law attorney with experience as a commercial real estate attorney, I have seen mistakes made over the years when it comes to leasing commercial real estate. Considering this topic, we have developed a list of observations concerning the top nine mistakes in leasing commercial real estate.

1. Waiting too long to look for lease space.

Give yourself plenty of time to find the right commercial real estate space. If you’re in a hurry, you may have to pay more, receive less favorable terms or take less desirable space.

2. Leasing the wrong space.

Work with a space planner or architect to recommend the right space for you.

3. Selecting the wrong location.

Consider things such as access, visibility, parking, public transportation, demographics, zoning laws and other facts to identify the right location for your business.

4. Not thinking about the future.

To deal with the unknown, negotiate a lease that provides both expansion and contraction rights to the extent possible. Companies may need to go beyond the “let’s keep this simple” mentality to think about sublease rights, expansion rights, rights to cancel, and options to extend the term.

5. Not measuring the space.

Verify the landlord’s square footage numbers if the rent for the space is determined by square feet. A small difference can translate into a large savings or expense. Standards are recognized for measuring space, such as those published by BOMA, the Building Owners and Managers Association.

6. Signing a lease too long or too short.

Clients sometimes believe the use of a short lease will keep costs down and the lease will be more flexible. If something is important to you, make sure it is discussed and it is written in the lease to your satisfaction.

7. Not verifying the condition of building systems and infrastructure.

Data, power, networking and HVAC capacity and availability are critical items. Confirm the building you will occupy can provide telephone and computer network connectivity and other systems at a cost you find acceptable for the operation of your business. Do your due diligence before signing any lease.

8. Not having your insurance agent and attorney review the lease’s requirements for insurance coverage.

Tenants should have their insurance agent and attorney review the insurance requirements of the lease that pertain to the insurance coverage and “subrogation” to verify insurance is not only available, but also available at a reasonable cost. Do this before the lease is signed.

9. Not using real estate professionals.

Many tenants and landlords do not receive help from real estate professionals, a commercial real estate attorney and a commercial real estate broker. Some tenants and landlords are so cost conscious they undervalue how and what the real estate pros can do to provide value to either the tenant or the landlord. Use a commercial real estate broker and a commercial real estate attorney whether you are the prospective tenant or landlord.

This article is for general information only and is not intended to provide legal advice. These are not the only mistakes one may make when leasing commercial real estate. If you have questions or concerns about your commercial lease, please call us at 813-852-6500 for a free 30-minute consultation with a commercial real estate attorney.

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