Leasing a Location for Your Business

Choosing and leasing a location for your business can be a critical decision. If your business is dependent on walk-in traffic, such as with a retail business, the importance of location is obvious. Service businesses are usually less location-dependent, but location can play a critical role in creating the right business environment and in determining your ability to attract and retain both the customers and the employees you want.

Be sure to consider all the factors when leasing space, not just the level of monthly rent.

Some "non-lease" issues

  • Convenient Parking. Consider customers, employees and anyone visiting your business. You don’t want to make driving to your location a hassle.
  • Communication Services. Everyone is wired these days. The last thing you want is for people to come to your business and think they’ve traveled back in time to the Stone Age. Research your options, ask other tenants what type of communication capabilities they are using and stay up-to-date on advancements, changes and offers.
  • Traffic Considerations. As most of us are aware, sitting in traffic can be a huge waste of time. When looking for a place for your business to call home, keep in mind the traffic flow surrounding the area. You’ll want it to be safe, convenient and accessible. Contact the local department of transportation to verify if there will be any nearby, upcoming construction projects.
  • Nearby Amenities. Having nearby restaurants and other facilities nearby can be a convenience when taking clients out to lunch or holding large meetings or conferences for traveling visitors. If you foresee needing eatery spots or lodging nearby, pick a location for your business with plenty of surrounding options.

Real property lease issues

Below is a list of some of the most common issues that occur when a lease is being negotiated. Understanding the terms of a lease can make the negotiation process easier for both you and the landlord. Settling on the terms of the lease does not have to be a contentious process. Remember that the landlord is also in business to make money.

Depending on your level of comfort with the entire leasing process, you may want to have your attorney review the lease before you sign it.

  • Nature and Duration of the Lease. Be sure to understand the term of the lease and the mechanics of any renewal options. Also be sure to completely understand when you are entitled to possession and use of the property.
  • Rent. In the lease contract, make sure it is clear when the rent is due and how it is to be paid, along with the actual amount to be paid. You should also be sure to understand if there is any "pass-through" of expenses like property taxes or maintenance costs.
  • Competition. If the space is being used for retail purposes, such as in a mall or shopping center, are there any restrictions on the landlord's ability to lease to your competitors. What are your remedies if a competitor moves in close-by?
  • Subletting. Do you have the right to sub-lease space if you find you don't need the space within the duration of the lease?
  • Physical condition. You may want the landlord to make certain improvements before you move in. This may include changing walls or electrical connections. What will be the general condition of the space when you move in and what condition must you leave it in when you move out?
  • Improvements. You may wish to make improvements to your space during your lease. You may need additional offices or just want new carpet. Be sure your lease allows you to make the improvements and try to get compensated for these improvements at the termination of your lease.

This list is not all-inclusive. You may want to use checklists found in many reference books or on the Internet to make sure all of your issues are covered. Click here for a printable checklist of topic areas you may want to consider before leasing a business location.

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