Signing a lease for your first (or your latest) retail enterprise can prove a daunting occasion. This written agreement between landlord and business tenant is a binding document, after all. And it commits you to an arrangement with another party that can be complicated and prone to misinterpretation.
Here’s some data points on the things.
- Leasing a commercial space generally takes place in two parts: the offer to lease and the lease itself. Be ready to negotiate and to prepare a written sub-offer.
- Given the inherently legal nature of a lease, tenants would be well advised to seek legal consultation before signing on.
- Keep your options open. If you can, identify two spaces that meet your needs, and let the leasing agents know about each other. Competition can only spell good things.
- Be solid on all the dates, including move-in, and make sure the landlord specifies an alternative if the space isn’t ready on time.
- Remember the power of restrictive clauses. You need to consider what safeguards the lease agreement includes that prevent competitive businesses from infringing on your territory (e.g., a provision that the landlord cannot rent to a like business in the same building)?
- Include a comprehensive account of included building services, like wifi, cleaning and utilities. Both parties have to be clear on who’s paying for what. Don’t forget property taxes.
- Be aware of the escalation clause, the section in a lease agreement that deals with a landlord’s right to raise rents. Ideally, you will negotiate this together.
- Consider including a renewal formula that guarantees you space when your lease expires in the original agreement. Otherwise, your landlord isn’t legally obliged to hold it for you.
- If you think you might change what you use the premises for, find out if there would be any restrictions or requirement for written permission.
A commercial lease is a big deal, and it behooves anyone entering into one to spend some time thinking about it. For more information, check the “Signing a Commercial Lease” page on the federal government’s Canada Business Network site.