Commercial leases can help businesses grow. New companies can acquire commercial space without first needing to qualify for a loan to purchase property. Growing businesses can try out multiple locations to see what works best given their needs or expand into new areas while minimizing the expense involved.
Commercial leases can be more cost-effective than purchasing commercial property and can limit the obligations imposed on a business owner. However, they also impose significant obligations on the commercial tenant. Business owners or executives seeking commercial leases often need to negotiate with landlords to customize the terms of their agreement.
Commercial leases tend to last for multiple years, making them a costly commitment. They may also have terms that new business owners may find surprising. Prospective business tenants often need to pay close attention to maintenance responsibilities and costs when negotiating a lease.
Commercial landlords pass maintenance costs to tenants
In a residential lease scenario, landlords have to assume most, if not all, repair and maintenance responsibilities. The same is not universally true when businesses rent retail space, manufacturing facilities or other commercial premises. Depending on the type of facility rented, a tenant may have direct responsibility for maintenance or may have to pay for maintenance services.
Landlords may pass all responsibility for maintenance to tenants in cases involving triple net leases. Other times, landlords may handle maintenance, but they may charge the tenant every month for their services. Tenants at strip malls or multi-unit office buildings may have to cover common area maintenance (CAM) fees. Those fees could be a fixed monthly amount or a variable amount every month based on operating expenses.
Business owners negotiating lease terms may be able to reduce maintenance costs based on their proposed use of the rental space. They may also be able to negotiate arrangements in which the landlord shares responsibility for certain types of maintenance that they often delegate to tenants.
Reviewing the terms of a commercial lease with a skilled legal team and determining whether it fits the company’s needs or not can be a complicated process. Negotiating terms that align with a company’s budget can help ensure that a new commercial lease is beneficial for a new or growing organization.
